December 1, 2024

Welcome to Letters from CAMP, a newsletter on anti-monopoly activity in Canada and abroad, brought to you by the Canadian Anti-Monopoly Project. In this installment we have:

• Competition Bureau sues Google for abusing its dominance in online advertising
• Grupo Bimbo accuses Maple Leaf Foods of selling them a cartel lemon
• Alleged algorithmic rent price fixing facing Competition Bureau scrutiny

Let’s dive in.

Google’s AdTech Empire Faces Canadian Reckoning

Canada’s Competition Bureau has launched a bold legal challenge against Google, accusing the tech giant of monopolizing online advertising to the detriment of Canadian businesses and consumers. The Bureau claims Google has tied its various ad tech tools together, effectively locking customers into its ecosystem while freezing out potential competitors. This follows a record-setting year in which over 200 billion Canadian ad transactions flowed through Google’s ad systems—a sobering statistic highlighting just how much influence one company can wield​​.

This case is the Bureau’s most ambitious enforcement action in years, paralleling the U.S. Department of Justice’s high-profile litigation targeting Google’s advertising empire. It’s a critical test of Canada’s recently updated competition laws, including strengthened powers to address abuse of dominance. Notably, it’s been nearly a decade since the Bureau’s last major abuse of dominance litigation — that time it was an unsuccessful attempt to shake up the supply of in-flight meals at the Vancouver International Airport.

It’s clear that today the enforcer’s ambition is better aligned with Canada’s monopoly moment. In a statement responding to the announcement, CAMP executive director Keldon Bester noted that “online advertising is a critical tool for every Canadian business trying to reach their customers, and monopolization of this market means inflated costs that are ultimately borne by consumers.”

The challenge also reflects a shift in focus towards the structures and incentives that allow firms to choke off competition. With the Bureau calling for divestitures along with financial and behavioural penalties, it’s clear Canada is stepping up as an equal partner in the global pushback against concentrated power. In taking on one the largest companies on the planet, the Bureau is in for a serious fight. But it will take swings like these to deliver the benefits of competition to Canadians across the country.

📚 What We’re Reading 📚

• David Moscrop, The Big Fix offers a compelling look at Canada’s problem with monopolies (Globe and Mail)
• Leah Nylen, Josh Sisco, and Dina Bass, Microsoft Faces Broad Antitrust Investigation From US FTC (Bloomberg)
• Caitlin Flanagan, The Democrat’s Billionaire Mistake (The Atlantic)

Food Fight: Grupo Bimbo Accuses Maple Leaf of Cartel Entrapment

Grupo Bimbo has filed a $2 billion lawsuit against Maple Leaf Foods, claiming it was misled into buying a company embroiled in Canada’s infamous bread price-fixing cartel. It’s a new twist in a scandal that has already seen grocery giants like Loblaw and Weston settle class-action lawsuits while the results of the government’s case against the cartel largely remain to be seen.

The story underscores the glacial pace of enforcement or accountability for the alleged participants under Canada’s competition law. Uncovered seven years ago, Grupo Bimbo is the only player so far to face any penalties from the government’s investigation. This is the case despite the cooperation of Loblaws in uncovering the cartel in the first place and their corresponding immunity deal.

But justice has come from other areas of the legal system in the meantime. Loblaw and George Weston, the first defendants to settle lawsuits, agreed to pay $500 million in damages earlier this year, inclusive of the $96 million they previously distributed in $25 gift cards as compensation. Still, these settlements pale in comparison to the potential scale of the cartel conduct, which overcharged Canadian consumers an estimated $5 billion between 2001 and 2015. Despite this, many accused grocers, including Sobeys and Metro, deny participation in the scheme, arguing Loblaw’s accusations aim to shift blame from their central role​​​​.

📰 CAMP in the News 📰

• Ian Bickis, CI Financial Signs $4.7B deal to be taken private by Mubadala Capital (Canadian Press)

Algorithmic Rent Hikes Under the Spotlight

Corporate landlords are in hot water as Canada’s Competition Bureau investigates allegations of algorithmic collusion in rental markets. The Bureau’s inquiry, prompted by reports of Canadian landlords using AI tools like YieldStar, has put a spotlight on a practice some call a “housing cartel.” Designed to recommend higher-than-market rents by analyzing confidential industry data, these pricing tools have already drawn antitrust legal challenges and grassroots pushback in the U.S..

While we await the outcome of this investigation, it’s worth considering how antitrust cases can deliver a treasure trove of important revelations. Remember the bread price-fixing scandal? Emails unearthed during legal proceedings described cozy conversations between corporate executives about price adjustments for more kinds of food than just bread. Will the same happen here? What might a deep dive into landlords’ inboxes reveal about the human side of algorithmic decision-making?

Some major landlords, like Dream Unlimited, have announced a pause in using YieldStar amid the scrutiny, but let’s not mistake damage control for accountability. As Canada works to reverse the effects of the housing crisis, any practice that serves to raise the cost of housing should be under the spotlight.

If you have any monopoly tips or stories you’d like to share, drop us a line at hello@antimonopoly.ca

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