July 28, 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:

• The Balanced Economy Project shows how corporate break ups can help restore competition
• Grocery giant Loblaw settles bread price fixing class actions but Competition Bureau investigation continues
• Competition Bureau investigates potential algorithmic collusion in Canadian retail gas markets

Let's dive in.

The Growing Global Push to Dismantle Corporate Giants

A fascinating new report from our friends at the Balanced Economy Project (BEP) makes a compelling case for breaking up dominant firms that have come to characterize our economies. From Standard Oil to IG Farben to AT&T, history shows us that breakups can be a powerful tool for protecting democracy and fostering economic dynamism. In the report, BEP outlines this history while answering important questions about the feasibility and kinds of benefits that can result from corporate breakups.

Canada may not be ready to break up our domestic giants yet, but we’ve taken important steps to prevent them from growing larger. By modernizing our competition law with stronger safeguards against consolidation and empowering individual companies to fight back against monopolists, there’s been a sea change in our approach to concentrated corporate power. While the reforms have been critical, their effectiveness comes down to assertive enforcement. While next year may bring a change in government, it's worth remembering that stronger competition law has garnered cross party support.

Regulators in the U.S. have been showing what kind of positive impact stronger enforcement of even imperfect laws can have on the economy, and the powers that be are reacting accordingly. In the wake of Joe Biden, the strongest president on competition policy in living memory, pulling out of the presidential race, powerful donors see an opportunity to change direction on antitrust. Billionaires Barry Diller and Reid Hoffman have publicly expressed their hope that potential presidential nominee Kamala Harris would give Federal Trade Commission (FTC) Chair Lina Khan the boot if elected.

Major strides have been made globally in the fight against concentrated corporate power, and the fight continues as entrenched incumbents push back against this progress. Anti-monopolists should celebrate our wins, but we cannot afford to rest on our laurels.

Loblaw Settles Bread Price-Fixing Class Actions

Loblaw and its parent company George Weston have agreed to pay $500 million to settle two class-action lawsuits over their role in the great Canadian bread price-fixing scandal. While a major class action win, it’s worth noting that estimates of the harm caused to consumers by the cartel conduct are estimated north of $5 billion over its 15 year run.

The class action win is also a reminder that after more than six years since it was announced, the Competition Bureau's original investigation into the grocery giant’s is still ongoing. If an investigation into a cartel where a leading player comes forward with information takes this long to resolve, how long will it take to prosecute a major cartel where none of its participants cooperate with authorities?

Canadians deserve transparency into why it is taking so long for justice to be served in one of the country’s most monumental competition cases, and rapid resolution of these harmful cases going forward.

The Line Between Data-Driven and Collusion

This week the Competition Bureau announced it had obtained a court order to advance an investigation into data analytics firm Kalibrate's services for the retail gas industry. Kalibrate provides guidance to gas station operators on how they should price their products by giving them a window into the pricing behaviour of their competitors.

Sounds helpful to gas stations, but the Bureau is concerned that these services may be a little too helpful. Similar to the Agri Stats case in agriculture markets in the United States, the Bureau is concerned that the exchange of information is dampening competition between market participants by facilitating coordination. The investigation highlights a growing challenge in competition policy, how to ensure that data-driven tools don’t become a smokescreen for plain old price fixing.

In our submission to the enforcer’s consultation on AI and competition, CAMP called on the Bureau to investigate the potential for algorithmic decision-making to facilitate collusion. The Kalibrate investigation is a welcome sign that the Bureau is taking that potential seriously.

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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July 21, 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:

• European Commission delays Bunge-Viterra merger decision as Canada stays mum on potential harms
• Crowdstrike-Microsoft glitch brings airlines, hospitals and banks around the world to a standstill
• Vance VP selection breaks with Republican economic orthodoxy and spooks consolidated corporate power

Let's dive in.

EU Delays Bunge-Viterra Decision, Leaving Farmers in Limbo

The European Commission has extended its review of agribusiness giant Bunge's proposed US$34 billion acquisition of Viterra as the companies offer European concessions to address the agency’s concerns. This development comes as Canadian regulators remain silent on their own pending review of the deal, which threatens to further consolidate global grain markets at the cost of farmers around the world.

European review of the transaction runs parallel with a damning report from Canada's Competition Bureau which found the merger "likely to harm competition in markets for grain purchasing in Western Canada, as well as for the sale of canola oil in Eastern Canada." Among other concerns, the Bureau noted that Bunge's control of Viterra competitor G3 would enable coordination in the grain handling market, costing farmers millions annually.

These concerns were echoed in research from the University of Saskatchewan assessing the transaction, which estimated the deal could cost Canadian grain farmers over $700 million annually - far higher than the Bureau's $20 million annual projection.

As regulators run out the clock on issuing a decision on the transaction, Canadian farmers are left in limbo. It remains to be seen whether the long march of consolidation that has left them with fewer options in every area of their business will continue apace or if policy makers are ready to turn the page on this lax approach to protecting competition.

When Monopolies Fail Round Two: CrowdStrike-Microsoft Meltdown Reveals Fragile Ecosystem

A single software update from CrowdStrike sent Microsoft systems worldwide into a tailspin, and suddenly it was Y2K all over again. Flights grounded, hospitals scrambling, banks shuttered, all because one tech giant stumbled. Sound familiar?​

More than a glitch, this was just the most recent and global reminder of the fragility that comes with concentrated economic power. Much like the AWS outage in December 2021 that took down large swaths of the internet, the CrowdStrike incident highlights the systemic vulnerabilities created by over-reliance on a small handful of dominant tech firms.

We've warned about this for years: when a single point of failure can paralyze entire industries, we've got a problem bigger than any blue screen of death.

CrowdStrike's CEO George Kurtz was quick to assure us it wasn't a cyberattack. Cold comfort, that. Whether it's a hack or a hiccup, the result is the same: our over-reliance on tech monopolies leaves us vulnerable. It's time for policymakers to wake up to the need for a more diverse, resilient tech ecosystem—not just for innovation's sake, but for our collective safety as well.

Vance VP Nod Shocks Corporate America

Donald Trump's selection of J.D. Vance as his running mate has set off alarm bells in boardrooms across America. The Ohio senator's past praise for Federal Trade Commission (FTC) Chair Lina Khan and skepticism of unfettered free markets puts him at odds with traditional Republican pro-business orthodoxy. "I guess I look at Lina Khan as one of the few people in the Biden administration that I think is doing a pretty good job," Vance said in February at an event hosted by startup incubator Y Combinator.

But even the Wall Street Journal's editorial board, constant critic of Chair Khan’s aggressive trust busting, is beginning to crack under the evidence that supposedly free markets are not delivering what they promised. In an op-ed for the paper this week, writer Glenn Hubbard acknowledged that "populist conservatives argue that this traditional approach to policy misses an important objective: a disruptive, rough-and-tumble economy, guided by technological advances and globalization, one that brings everyone along. Populist conservatives want more emphasis on protecting jobs and communities."

While Vance’s selection shows a growing understanding of the dangers of concentrated economic power on the right, it is still early days. American Economic Liberties Project’s Matt Stoller notes that the party's establishment and donor class still wield significant influence and Vance’s populism has a selective quality. For instance, he has been outspoken about his support for oil industry consolidation.

CAMP is optimistic about the renewed focus on competition issues across the aisle in the U.S. and Canada, but we'll be watching closely to see if rhetoric translates into meaningful action. An economy that benefits workers, consumers, and entrepreneurs alike takes more than words to bring into reality.

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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July 14, 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:

• Data breaches across industries show the hidden cost of centralization in our economies
• Saskatchewan’s missed opportunity to capture the value of its natural wealth
• U.S. DOJ prepares price fixing case against rental software company RealPage

Let's dive in.

When Monopolies Fail: The Not-So-Hidden Costs of Centralization

In a week that highlighted the vulnerabilities that concentrated economic power brings, we've seen major failures from Ticketmaster, AT&T, and, in the rear view, Rogers - each underscoring the risks of monopolistic control over critical systems and data.

Ticketmaster's recent hack exposed the fragility of its ticketing monopoly, with hackers releasing data to create over 38,000 duplicate concert tickets. This breach not only threatens to create chaos for venues and fans, but also reveals how Ticketmaster's dominant market share amplifies security risks across the entire live events ecosystem. A hack of Ticketmaster is a hack of almost the entire North American entertainment market.

Meanwhile, AT&T disclosed that hackers accessed a Snowflake-hosted cloud platform containing sensitive customer data, including call records and text message details for nearly all of its tens of millions of subscribers. This incident exposes the dangers of centralizing vast amounts of data with a single cloud provider, even as companies like Snowflake promise unparalleled efficiency and scale.

Closer to home, Canadians finally received the CRTC's report on the massive Rogers outage from 2022. While the report attributes the failure to human error, it glosses over the systemic risks created by having so much of Canada's telecommunications infrastructure controlled by a handful of small players.

The common thread? Concentrated economic power amplifies the scale of our vulnerabilities. When giants stumble, entire industries feel the tremors. Ticketmaster's hack threatens the whole live events ecosystem. Snowflake’s breach has shockwaves across the many industries that compose its corporate consumer base. Rogers' outage paralyzed swaths of Canada’s communications and financial infrastructure. These incumbents claim that only they have the resources to manage critical systems. But the reality is that their size makes them juicy targets for bad actors and potential catastrophic points of failure for our economies. Fair competition doesn’t just drive innovation and better pricing, it boosts resilience through distributed risks and higher standards for consumer protection. Multiple ticketing platforms, diverse cloud services, and a richer telecom landscape would all help mitigate the impact of individual failures.

But when monopoly becomes a reality, we need robust oversight and real consequences for failures that can impact tens of millions. With neither adequate competition or consumer protection we should not be surprised by the next week of headlines highlighting the not-so-hidden costs of monopolies.

Potash Profits: When Public Wealth Becomes Private Gain

Despite the appearance of runaway success, Saskatchewan's potash industry offers a stark lesson in the perils of putting the interests of big business ahead of broad-based prosperity. Despite controlling a third of global potash reserves - a larger share than Saudi Arabia's portion of the global oil market - Saskatchewan has seen its provincial debt double since 2008 despite frozen social assistance rates and child poverty at 26% compared to the national average of 18%.

How is this possible? As Eric Cline, former Saskatchewan cabinet minister sees it, a royalty and tax system that heavily favors industry players over public benefit. In 2022, when potash revenues doubled to $18 billion on unchanged production, the province received a mere $1.4 billion while industry pocketed a $7.2 billion windfall. Rather than spreading the benefits of the resources under our feet and investing in our productive infrastructure, Saskatchewan provides another case study of Canada’s natural wealth being concentrated in the hands of the few.

Turning away from the lessons of former Alberta premier Peter Lougheed’s approach to the province’s oil resources, the case of potash represents a missed opportunity to invest in education, healthcare, and poverty reduction. Returning to Cline, "let's be considerate of investors and shareholders. But at the same time, let's consider the needs of children to be fed and to have a quality education, and of people to have a roof over their heads."

The Hidden Hands Shaping Rental Markets

Recent developments south of the border have shed light on a troubling trend in rental markets: the use of algorithmic pricing tools to potentially facilitate collusion among landlords. As the U.S. Department of Justice prepares a lawsuit against rental software company RealPage, Canadians must ask: are similar technologies inflating rents in our own already overheated housing market?

This situation is emblematic of the challenge of algorithmic pricing to competition policy, something CAMP highlighted in its submission to the Competition Bureau’s consultation on competition and AI. We need to balance the use of tools that make markets more efficient with the understanding that they can also facilitate the private collusion we have laws to protect against. The answer is to use the Competition Bureau’s new powers to investigate the use of algorithmic decision making and their effects on market dynamics.

Algorithmic collusion in housing is particularly problematic because it shows how collusion can occur even outside the usual suspects, highly concentrated markets with few players. While Canada has its share of oligopolies we must contend with, we need to be vigilant for unfair competition in any market. Reversing the ongoing housing crisis will take action at all levels of government and across policy disciplines. Competition policy has a role to play in ensuring that fair competition in the housing market works for those who need an affordable roof over their head.

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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