How dividend recapitalizations undermine Canadians’ productivity and prosperity
In recent years, there has been an increase in dividend recapitalizations, most notably in the private equity industry; these investors are using cash flow (not just profits) to enrich themselves. This is a worrying trend.
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Letters: Paying for It
November 3, 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.
Conservatives Take Aim at Payments Giant InteracConservatives have set their sights on the companies that control the lifeline of the Canadian economy: our payments network. This week, Conservative MPs Michelle Rempel Garner and Adam Chambers called for the Competition Bureau to investigate Interac’s e-Transfer fee structure and whether it was advancing the interests of the banks that effectively own the network. This kind of scrutiny is critical amid ongoing concerns that Canada’s biggest banks are slow rolling innovation in the payments sector by keeping innovative competitors at bay. MP Garner pointed out that Interac’s fee structure offers more attractive pricing for high volume participants, meaning that a new entrant in the payment space has to overcome a built in cost disadvantage compared to incumbent players. CAMP has been here before, laying out the costs of our concentrated banking sector and building out a roadmap to a more competitive future. Canadians deserve a financial system that promotes innovation instead of being engineered to squeeze as much as possible out of every transaction. If we want a fairer system, policymakers need to realize there is not a direct tradeoff between stability and competition in the banking sector. Canada’s high regulatory standards can be maintained while creating an environment conducive to new entrants looking to unseat our largest financial institutions. CAMP is glad to see that Conservative MPs understand this and hope for continued pressure to promote competition in our financial sector. 📰CAMP in the News📰The Call is Coming from Inside the House: Loblaws Calls for End of Restrictions it EnforcesPer Bank, CEO of grocery giant Loblaw , wants things to change, but he wants you to go first. In an op-ed this week, Bank suggested that the answer to grocery competition woes is to eliminate commercial property restrictions currently under investigation by the Competition Bureau. Bank argued that this would boost competition and benefit Canadian consumers But as a grocery CEO, Bank is in a bind calling for more competition. In one breath, Bank claims grocery competition has no impact on prices, and in the next, he’s pushing for expanded competition as a solution to the affordability crisis. Another glaring issue is that Bank himself has the keys to likely one of the largest collections of restricted properties in Canada under Loblaws’ Real Estate Investment Trust (REIT) arm. We’ve previously covered the Competition Bureau investigations into property controls used by Loblaws and Sobeys to limit competition. Restrictions like these are business as usual, and the two companies have been using them for decades to block new players from entering and expanding in the market. While Bank’s PR move may seem admirable, if Loblaw is serious about increasing competition it could start by immediately striking restrictive clauses from all its properties. We know that real competition requires more than just empty promises in op-eds. Canadians need structural changes that make space for smaller players to compete, not half-hearted gestures meant to dodge deeper scrutiny. The recent surge in grocery prices has laid bare how a lack of competition impacts affordability. Canadians should not be swayed by performative gestures from the industry's largest players. 📚What We’re Reading📚
International Rent Price Fixing PushbackPrice fixing is price fixing, and Canadians are starting to push back. This week Toronto tenants secured a victory against national landlord GWLRA after it announced it would no longer be using the YieldStar pricing software of its rental properties. Yieldstar has come under antitrust scrutiny in the U.S. with enforcers alleging the software has allowed landlords to tacitly collude, killing competition and pushing up rent prices. At CAMP as we’ve previously detailed both how algorithmic pricing is being used to dampen competition at the expense of Canadians and how tenants in Toronto's Weston neighborhood uncovered and have been protesting the use of YieldStar by their own landlord, Dream Unlimited. While the Competition Bureau is investigating similar practices by the company Kalibrate in the gas station market, an investigation has yet to be launched against RealPage, the provider of YieldStar. On top of the ongoing antitrust litigation, antimonopoly champions at the American Economic Liberties Project have launched a campaign to ban the use of similar software across the U.S., stressing the dangers of algorithm-driven rent hikes and calling for state and local action to complement stronger antitrust enforcement. Unchecked use of these tools poses a serious risk to competition, fairness and affordability. Citizens shouldn’t have to protest just to secure fair rental pricing— competition laws must be enforced to protect consumers from predatory practices. If you have any monopoly tips or stories you'd like to share, drop us a line at hello@antimonopoly.ca |
Letters: Stuck in the Middle
October 27, 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.
Canadian Farmers Caught Between GiantsLast week, CAMP released our new report From Plow to Pantry: Monopoly in the Canadian Food System, detailing how consolidation has affected every level of the food supply chain. In particular, the report focused on how farmers are caught between high levels of consolidation at both ends of their business, leaving them with few options and little competition. This week, the Globe and Mail’s editorial board called on Canadian policy makers to do something about it. The piece highlights the challenges Canadian farmers face as they are squeezed by oligopolies both when buying inputs and when selling their products—trapped between monopolies at both ends of the supply chain. The content of the editorial will be familiar to Letters from CAMP readers. Just one example, consolidation among beef processors has led to only two companies controlling effectively all Canada’s beef slaughter capacity—a shocking drop from the diversity that existed as recently as 2005. This monopolization affects not just the prices paid at the grocery store, but also the financial viability of family farms across Canada, leading to fewer options for consumers and stifling the potential for innovation in the sector. But there is a path forward. Though consolidation is difficult to reverse, there are steps policy makers can take today to begin the process. By pointing Canada’s recently reformed competition law at our food system, we can begin to unwind the costs of a decades long embrace of consolidation at the cost of not only consumers but those that work hard to put food on our tables. On Monday October 28th, join CAMP and our international partners for a virtual talk on monopoly in the global food system and what can be done about it. Big Banks Say ‘Trust Us’ on Open BankingBack in September, we highlighted the importance of open banking for consumer empowerment in the market for consumer finance. But new developments show that the rollout of open banking might be more of the same: a chance for big banks to tighten their grip. The latest from The Logic explains how Symcor, a joint venture by three of Canada’s largest banks, is pushing for a big-bank driven approach to open banking. Fintechs and consumer advocates are raising the alarm that this will reinforce the bank’s gatekeeper power and force new, innovative companies to compete on terms set by the banks themselves. As Andrew Spence argues in his new book, Fleeced: Canadians Versus Their Banks and in a recent piece for CAMP, big banks have long prioritized outsized profits over open competition, and the Symcor path to open banking is likely to follow that trend. The promise of open banking was to provide consumers with more control over their financial data and to foster innovation by enabling fintechs to compete with traditional banks. But Symcor's approach raises concerns that open banking will replicate the power of other big bank joint ventures like Interac, the payment network that has been the subject of multiple competition law cases over the years in Canada. Banks need to be reminded that the financial information of Canadians belongs to the individuals who generate it. It's crucial that policymakers ensure the open banking framework lives up to its promise of fostering competition and innovation, rather than entrenching existing power structures. 📚What We’re Reading📚
Luxury Monopolies MatterAmid a cost of living crisis, a luxury handbag merger may not seem like a big deal, but not to Federal Trade Commission (FTC) Chair Lina Khan. This week, a U.S. judge sided with the FTC in blocking an $8.5 billion merger between Tapestry, the owner of Coach and Kate Spade, and Capri Holdings, which controls Michael Kors. The key takeaway? We need to care about consolidation in every sector—not just the ones that immediately impact our own wallets. Monopolistic behavior in seemingly niche markets like "accessible luxury" may seem far removed from everyday concerns, but these markets matter. Though the companies were framed as purely luxury goods providers by pundits, competition between these firms affects price, quality and variety for goods enjoyed by a wide range of consumers. Consolidation begets consolidation, and if we accept it in markets we think don’t matter to us it’s only a matter of time before the effects hit closer to home. When mergers like this are blocked, it sends a clear signal that no industry is exempt from scrutiny—even those that might seem less consequential to the average person. From necessary staples like food and shelter, to whatever else we choose to spend our money on, competition policy has a duty to protect fair and competitive markets. If you have any monopoly tips or stories you'd like to share, drop us a line at hello@antimonopoly.ca |
Feeling the pinch on both sides
The Globe & Mail
A new report by the Canadian Anti-Monopoly Project (CAMP) makes the point that, “Canadian farmers are price-takers trapped in the middle of a U-shaped power asymmetry between the companies from which they buy inputs from and the companies to whom they sell their products.”
Buckle up for an activist Competition Bureau
The Globe & Mail
The bureau for decades was an afterthought. Today it is emboldened, bolstered by a forceful leader, a bigger budget and, most of all, stricter new rules. The bureau grounded its Cineplex case in the recently overhauled Competition Act, which features consumer-friendly changes that aim to better protect Canadians.
Letters: Food Monopolies
October 20, 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.
How Monopoly is Eating the Canadian Food SystemOut this week, CAMP’s latest report, From Plow to Pantry, shows how everything from seeds to supermarket shelves in Canada is in the iron grip of just a handful of companies. The report is the latest in our work highlighting the dangers of this unchecked corporate consolidation in every corner of the economy. Far beyond the checkout counter, at each step of the supply chain, starting from equipment, seeds, and fertilizers, large corporations wield significant power, leaving farmers and consumers with fewer options and higher costs. Canadians are already too familiar with the consequences in retail grocery, where decades of consolidation have made the marketplace less competitive. But our report shows the additional costs of consolidation, stifling innovation and squeezing out smaller players, making the food system vulnerable to supply disruptions and price gouging. The cost of living crisis has brought renewed attention to competition in the grocery sector, but Canadians need to go deeper to truly have a fairer food system. With a renewed focus on competition policy, there’s hope for change. CAMP has advocated for new tools and frameworks to challenge monopolistic practices and bring fairness back to the food system. By preventing further consolidation, enforcing stronger competition laws, and tackling unfair competitive practices, we can build a food system that serves everyone—not just the corporate giants. Private Equity's Bedside MannerAnother one of Canada’s storied financial institutions received a mark on its reputation this week. The Toronto Star broke that Orpea, a French operator of nursing homes had reportedly mistreated residents in its care homes across Europe before going bankrupt. The twist? Canada’s largest pension fund, CPP Investments had a major stake in the company. Unfortunately the Orpea is a microcosm of what happens when major investors and private equity get into the care business. A 2021 economic study showed that the rise in private equity in American nursing homes had led to lower standards of care and higher prices for residents. But this phenomenon isn’t limited to nursing homes. Across Canada, private equity firms have been quietly buying up retirement homes, veterinary clinics, and local dental practices. CAMP fellow and ex-private equity lawyer Rachel Wasserman has been studying these trends and warned on this week’s episode of the Globe and Mail’s Lately podcast that private equity’s focus on short-term profit is hollowing out important sectors of the economy. Wasserman will explore these trends in a forthcoming paper for CAMP, but in the meantime the podcast provides a great overview into the private equity playbook and its societal impact. 📚What We’re Reading📚
The FTC’s Click-to-Cancel CommonsenseThis week the U.S. Federal Trade Commission (FTC) introduced a new "click-to-cancel" rule designed to make canceling a service as easy as signing up for it. The rule is an important and obvious consumer protection win that Canada should emulate as soon as possible. Effective in 180 days, the rule will require companies to provide a simple, straightforward way for consumers to end their recurring subscriptions. Dark patterns and convoluted cancellation flows have long been a tool for companies to quietly extract more money from unsuspecting consumers. Negative option billing—where a subscription continues unless the consumer takes action to cancel—has been a thorn in the side of many, with complaints only increasing in recent years. The new FTC rule prohibits misleading practices and ensures consumers have a clear understanding of what they’re signing up for, and how they can get out of it. Canadian and American consumers both pay the cost of these exploitative practices, and without action up north Canadians are stuck calling in to a phone line that no one picks up if we ever hope to get out of the gym memberships we haven’t been using. This new rule is not just about convenience; it’s about commonsense. By making it easier to cancel unwanted subscriptions, the FTC is striking a blow against private regulation by corporations that says canceling a service should be a headache. CAMP will continue to push for similar protections because Canadians deserve a market that respects their choices and values their time. If you have any monopoly tips or stories you'd like to share, drop us a line at hello@antimonopoly.ca |