Letters: The Private Equity Playbook
November 17, 2024Welcome 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:
Let's dive in.
The Private Equity PlaybookThis week we're excited to unveil CAMP's latest report: The Private Equity Playbook: How Buyout Firms Extract Rather Than Build Value and What to Do About It. Authored by CAMP fellow Rachel Wasserman, this report dives deep into how private equity is expanding its grip across industries in Canada—from veterinary clinics to aircraft landing gear—leaving behind a trail of unsustainable debt, market consolidation, and a lack of transparency. Wasserman argues that if Canada is serious about fostering a competitive and growth-oriented economy, we must rethink the incentives that reward extracting value rather than building it. Private equity firms often prioritize short-term gains, leading to job cuts, reduced quality of services, and excessive debt burdens placed on the companies they acquire. To counter these destructive practices, Wasserman recommends empowering the Competition Bureau to take stronger actions against anti-competitive industry roll-ups, promoting alternative ownership models, and closing tax loopholes that favor leveraged buyouts. Rachel’s excellent work has been making waves, recently appearing on CBC's Cost of Living and The Globe and Mail’s Lately podcast to discuss the implications of private equity's ever-expanding reach on the Canadian economy. Building on Rachel’s work, CAMP and Social Capital Partners (SCP) are hosting a virtual talk on Monday Nov 18 with guests including Private Equity Stakeholder Project (PESP) executive director Jim Baker and Brendan Ballou, author of the book Plunder: Private Equity’s Plan to Pillage America. Interested? You can register for the event here. CAMP Supports Canned Tuna Cartel Class ActionThere are few markets more important than those that put food on our tables. Accordingly, this week CAMP was glad to support an application for leave to the Supreme Court in the Lilleyman v. Tri-Union Seafoods LLC case. The appeal aims to certify a class action addressing a canned tuna price-fixing conspiracy that may have impacted Canadian consumers. While the same multinational companies who represent the majority of Canada’s canned tuna market were found guilty of price fixing in the United States, to date our courts have refused to certify a class action suit investigating whether the same conduct has harmed Canadians. This U.S. canned tuna price fixing is part of a broader pattern of anti-competitive behavior in the food system, where price-fixing and collusion are all too common. From Canada’s infamous bread price-fixing scandal to ongoing investigations into the use of property controls to kill grocery competition, monopolistic practices are pervasive. CAMP's support for the appeal is rooted in our commitment to ensuring fairness across our food system. As seen in the bread price fixing case, class actions are an essential tool for deterring cartel conduct and delivering justice to corporations that abuse their power. Moreover, the implications of this case extend beyond canned tuna. If left unheard, the case would make it more difficult for future price-fixing class actions to proceed, making it harder for consumers to hold large corporations accountable. By seeking to intervene in this case, CAMP is supporting the push to safeguard consumers' rights and uphold fair market practices that benefit all Canadians. 📚What We’re Reading📚
Khanservatives in the Cabinet? Rumblings Signal Trump’s Anti-monopoly PotentialAs CAMP covered last week, no one knows which way a Trump administration will go on antitrust policy. But early signs suggest those forecasting a return to pro-monopoly business as usual may have popped the champagne too quickly. Trump is reportedly considering new names for the FTC who could continue the aggressive antitrust stance of Lina Khan, especially when it comes to Big Tech. According to the Financial Times, Gail Slater, a top aide to vice-president-elect JD Vance, and Mark Meador, who previously worked as an enforcer at the Department of Justice’s antitrust division and the Federal Trade Commission, are the frontrunners to lead the FTC. Slater has been deeply involved in crafting tech and competition policy for Vance, and her experience suggests she would continue an assertive approach as FTC Chair. At the same time, Meador has a track record of challenging anti-competitive practices both at the DOJ and the FTC, making him a strong candidate for maintaining a tough stance on corporate power. These ‘Khanservatives’ have the potential to keep Big Tech in America’s antitrust sights, focusing on maintaining scrutiny of dominant industries and pushing back against monopolistic practices. It’s been a little more than a week after the U.S. election, so CAMP is keeping any bubbly beverages on ice, but early indicators are encouraging. We’re far from a new consensus, but it’s clear that conservatives are beginning to understand the danger of unchecked corporate power. Canada’s cross-party support for stronger competition laws may end up being a bellwether of things to come outside our own borders. 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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Letter | CAMP Supports Appeal of Certification in Canned Tuna Price Fixing Case
The Canadian Anti-Monopoly Project (CAMP) has sent a letter to the Supreme Court of Canada in support of the application for leave to appeal in the Lilleyman v. Tri-Union Seafoods LLC, et al case alleging a price fixing conspiracy which has harmed Canadian consumers.
CAMP raises three key points to reflect the public importance of the issues raised in the proposed appeal:
- Price-fixing concerns exist in Canada: Recent years have shown there is risk for price-fixing in the Canadian economy and that addressing this kind of conduct is particularly important amid an ongoing affordability crisis.
- Cartels operate across borders: Price-fixing often involves multinational companies, with decisions in one country affecting customers in others. This case has implications for pursuing cartels that impact Canadian consumers but originate outside of Canada.
- Role of private enforcement: Recent amendments to the Competition Act have expanded the role of private access in addressing anti-competitive conduct. Class actions are essential for consumers to seek redress, and any decision that narrows this role could hinder effective deterrence of anti-competitive behavior.
You can read the letter here.
Report | The Private Equity Playbook: How buyout firms extract rather than build value and what to do about it
From veterinary clinics to aircraft landing gear, private equity is expanding its presence across in industries in Canada. But what is private equity and what are its potential consequences for the Canadian economy?
In a new report for CAMP, Rachel Wasserman investigates the rise of buyout private equity in Canada and the implications for the future of our economy including market consolidation, unsustainable debt burdens, and reduced transparency.
To foster a competitive and growth-oriented economy, Canada must address the incentives that favour extracting wealth out of companies rather than building it. By empowering the Competition Bureau to pursue industry roll-ups, regulating leveraged buyouts, promoting alternative exit options for entrepreneurs, and closing tax loopholes, we can create an economy we build up rather than buy out.
Read the full report here.
Letters: Post-Election Antitrust
November 10, 2024Welcome 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:
Let's dive in.
What Does Trump Mean for the Future of the Anti-monopoly Movement?With the outcome of the U.S. election decided and the Trump Vance ticket victorious, the coming months offer ample opportunity for speculation on what the next Trump administration will actually look like in practice. Naturally, at CAMP we’re focused on what this means for the future of American antitrust after four years of some of the most dramatic, exciting and beneficial action in the space. The hard truth is that a continuation of the momentum under the Biden administration is unlikely. As anti-monopoly advocate Matt Stoller pointed out this week, one group for which this message is coming through loud and clear is the good folks on Wall Street. CNBC pundits report hearing from the CEOs of the largest companies on the planet that they are licking their chops dreaming up the kinds of mergers and acquisitions that were out of the question under the leadership of FTC Chair Khan and U.S. DOJ Assistant Attorney General Kanter. There is good reason for their excitement and our concern. Absent from the most recent campaign was the anti-big business rhetoric that made up a plank of Trump’s pitch in 2016. In its place, a close embrace of interest groups like Big Oil and Big Crypto, as well as Elon Musk, the richest man on the planet and no fan of Chair Khan. There is a very real possibility that the next Trump administration shutters the important ongoing antitrust challenges against firms like Google and Amazon and pro-competition work of agencies like the Department of Transport and Agriculture. It was never going to be a smooth ride for truly anti-monopoly antitrust, no matter the outcome of the election. As CAMP executive director Keldon Bester wrote earlier this year, the embrace by Kamala Harris of Big Tech boosters into her closest circles meant it was just as likely that her administration broke with Biden’s pushback against the tide of corporate power. Having faced a real challenge for the first time in decades, corporate power is once again flexing against the tools of democracies to keep them in check. Still, there is reason for optimism. Trump’s selection of J.D. Vance as his Vice President brought one of the most prominent Republican fans of trustbusters like Lina Khan and Rohit Chopra into the President-elect’s orbit. Vance draws on the work of prominent thinkers on the American right, including Compact magazine editor Sohrab Ahmari who earlier this year called on the next President, whoever they ended up being, to keep in place the economic reformers brought in under Biden. It is also worth keeping in mind that the surge in antitrust activity in the United States has not been limited to the federal agencies, with states and private actors bringing a range of important suits against concentrated power. And as groups like CAMP here in Canada and the Balanced Economy Project in Europe prove, the pushback against global corporate power is just that: global. The Biden administration led the way in showing people around the world what anti-monopoly policy can do for average citizens. Returning to Stoller, there’s “no putting the toothpaste back in the tube on competition policy.” The truth is that no one knows what American antitrust will look like under the next Trump administration. But what was going to be true no matter the outcome of the U.S. election is that our work is just getting started. 📰CAMP in the News📰
Other Things Happened This Week, We SwearThe Competition Bureau has come out in favour of choice at the pharmacy. Joining a list that includes provincial authorities, pharmacist associations and consumer advocacy groups, the Competition Bureau has made it clear: preferred provider networks (PPNs) harm patient choice. PPNs are exclusive arrangements between insurance providers and corporate pharmacy brands. These arrangements have meant patients are either forced to change pharmacies or pay out of pocket for medications if an in-network pharmacy is unavailable. As CAMP has discussed before, business deals that limit consumers choice in pharmacies are simply strategies to consolidate the market power of the larger insurance providers and vertically integrated pharmacy chains. We’re encouraged that the Bureau has listened to the public outcry against the recent attempts to establish and expand PPNs in Canada. But the implications of PPNs reach beyond immediate consumer choice—they threaten the viability of independent and community-based pharmacies, particularly in rural and underserved areas. The Bureau’s submission emphasized that these restrictive arrangements could lead to a more concentrated pharmacy market, ultimately limiting patients' access to essential medications and health services. It is essential that policymakers protect the competitive landscape to ensure that all pharmacies, big and small, can serve their communities without artificial corporate barriers. 📚What We’re Reading📚
Dividend Recapitalizations and the Giant Sucking Sound in the Canadian EconomyThe phrase ‘dividend recapitalization’ doesn’t exactly excite the senses, but it should. This week CAMP fellow Rachel Wasserman took to the pages of the Globe and Mail to outline how the seemingly innocuous practice by private equity firms is actually a drag on Canadian productivity and prosperity. Dividend recapitalizations involve private equity firms forcing the portfolio companies they own to take on massive new debt just to hand over cash in the form of dividends. The practice leaves companies strapped and unprepared for growth—or worse, hardship. The same cash that could be used to invest in the business, boost productivity and create jobs ends up filling investors' pockets, while Canadian workers, businesses, and communities bear the risks and consequences. Policymakers need to understand these practices and the incentives that drive them. Rachel points out that we need policies and business behavior that prioritizes long-term growth and sustainability over short-term investor gains. The timing for Rachel’s article couldn’t be better. On November 18th at 12 - 1pm EST, CAMP and Social Capital Partners (SCP) will be hosting a virtual talk on private equity and its impact on the Canadian economy.
With a panel that includes the executive director of the Private Equity Stakeholder Project and the author of Plunder: Private Equity’s Plan to Pillage America, it’s sure to be an interesting discussion and we encourage you to register here. If you have any monopoly tips or stories you'd like to share, drop us a line at hello@antimonopoly.ca |
Cost of Living with Paul Haavardsrud
CBC
Paul Haavardsrud talks to CAMP Fellow, Rachel Wasserman about what private equity is and the buying spree the Canadian private equity industry has done in Canada over the last 15 years.
Dye & Durham Tumbles on Competition Probe Amid Deal Interest
Financial Post
Dye & Durham Ltd. shares fell about 18%, the most in over a year, after Canada’s Competition Bureau obtained a court order to investigate alleged anti-competitive conduct at the legal and business software company.