July 7, 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:

• Globe and Mail editorial board highlights unanimous support for stronger competition law
• U.S. lab testing monopolist Quest Diagnostics moves to acquire Canadian LifeLabs
• Canadian discount mobile prices rise amid claims of vigorous competition

Let's dive in.

Globe Notes Rare Moment of Parliamentary Unity in Competition Push

As Letters has detailed before, Parliament’s unanimous support for stronger competition laws has been a refreshing display of bipartisan cooperation amid rising political polarization. This week, the Globe’s editorial board noted that this rare moment of unity underscores the broad recognition that our economy desperately needs to turn away from our monopoly past and embrace fair competition.

CAMP was heartened to see our efforts on the competition reform file acknowledged, with the editorial citing our assessment that the law has shifted from a "pro-consolidation" position to "a much stronger stance against abuses of concentrated economic power." The Globe is right to identify these reforms as a pivotal turning point in Canada's approach to market power.

But laws are what we make of them. Moving forward, the real test will be in bold enforcement of Canada’s news competition law. CAMP will be watching closely to ensure the Competition Bureau makes use of the full potential of its expanded toolkit to foster a more competitive, innovative economy that works for all Canadians. This unanimous overhaul has laid the groundwork - now we need to build on it.

Quest for Dominance: U.S. Lab Monopolist Sets Sights on Canada

Quest Diagnostics' proposed $1.35 billion acquisition of LifeLabs should set off alarm bells for Canadian regulators. While lab testing giant Quest touts the deal's potential benefits, its track record in the U.S. market tells a far more concerning story.

As detailed in a 2020 expose, Quest has systematically monopolized regional lab markets in the U.S. through predatory tactics and strategic acquisitions. The company has leveraged its market power to engage in exclusionary contracting with insurers, run legitimate competitors out of business with unfair practices, and prioritized profits over timely test results - even during a pandemic.

Now, Quest aims to bring its monopolistic playbook north of the border. While LifeLabs will ostensibly maintain its brand and Canadian headquarters, we've seen this story before. Gradual integration and "efficiency" measures often lead to job cuts, reduced competition, and higher prices for consumers.

Though the parties will argue the transaction leaves concentration levels unchanged, Canadian regulators must move to block the spread of Quest’s harmful practices. The health of Canada’s medical testing market, and our healthcare system by extension, may depend on it.

Canadian Mobile Prices Headed in the Wrong Direction

Quebecor is making noise about fulfilling its post-acquisition promises for Freedom Mobile, touting flashy plans like 50GB for $34. But while headline-grabbing offers might seem impressive, they mask a troubling trend: overall wireless revenues per user are creeping back up across the industry.

Case in point: Virgin Plus, Bell’s flanker brand, just hiked prices on most plans by $5-$10 per month. This pattern of "discounts" followed by industry-wide price increases is all too familiar in Canada's telecom oligopoly.

The key metric to watch isn't gigabytes per dollar, but average revenue per user (ARPU). Despite periodic plan shake-ups, Canada's largest providers have consistently grown mobile ARPU year over year. It's a profitable trick - they offer more data to grab headlines while quietly increasing overall spending through fees, add-ons, and strategic price adjustments.

True competition would drive ARPU down over time as carriers fight for market share. Instead, we see coordinated moves to protect profit margins. Policymakers and regulators need to look beyond splashy GB/$ offers and focus on fostering an environment where carriers are forced to compete on overall value and affordability. Until we see sustained downward pressure on ARPU, claims of a newly competitive wireless market will continue to ring hollow to Canadians.

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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June 30, 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:

• CAMP calls on the Competition Bureau to protect competition in the markets for AI
• U.S. grocery giant abandons property controls after antitrust scrutiny
• Anti-monopoly coalition calls for defending competition in digital advertising markets

Let's dive in.

CAMP: Bureau Must Protect Competition in Emerging AI Markets

This week, CAMP submitted a response to the Competition Bureau's call for information on protecting competition in the markets for artificial intelligence (AI). In its submission, CAMP emphasized the need for proactive measures to prevent the consolidation of power in AI markets. Learning from the mistakes of the last generation of digital markets, vigilance is needed today to avoid the same pattern of consolidation of power playing out in the markets for AI.

To protect competition, CAMP's submission calls on the Bureau to take three concrete actions. First, beyond a call for information, the Bureau must use its new market study powers to evaluate the competitive landscape in AI. Part of that study must include scrutiny of the web of partnerships between major tech firms and AI startups, ensuring that these partnerships are not "acquisitions by stealth" intended to avoid antitrust scrutiny.

CAMP also calls for the study of how AI capabilities might enable anticompetitive practices familiar to competition law such as collusion. Even rudimentary implementations of AI such as algorithmic pricing have the potential to undermine competition and require the Bureau to keep its own capabilities current.

The Bureau’s call for information comes at a time of broader focus on AI in the federal government. Innovation Science and Economic Development (ISED) has launched a public consultation on how to allocate its $2 billion investment in AI computing infrastructure, announced in the April 2024 budget. As the government seeks to bolster Canada's AI capabilities, it must also ensure that these investments must support fair competition and avoid subsidizing the concentration of power in the hands of a few dominant players.

U.S. Grocery Giant Backs Off Property Controls

It’s not just Canada where grocery monopolies are under the spotlight. Amid the risk of further consolidation in the pending Kroger-Albertsons merger, some bright spots have emerged south of the border. Following antitrust scrutiny on the part of the Washington state attorney general, grocery giant Albertsons has abandoned restrictive land use clauses in the city of Bellingham. Though a local victory, the decision is a crucial step towards dismantling anti-competitive practices that have long plagued the grocery industry in Canada and the U.S..

This move opens up opportunities for new grocery stores in previously restricted areas and sets a precedent that could ripple across North America. The removal of these clauses, which had effectively created a food desert in a low-income neighborhood, demonstrates the power of regulatory scrutiny in fostering a more competitive marketplace. It's a clear win for consumers who have been bearing the brunt of limited choices, higher prices, and worse health outcomes due to reduced competition.

The work of the Washington state attorney general mirrors steps taken by Canada's Competition Bureau in its investigation into the use of restrictive property clauses by major grocers Loblaw and Sobeys. Though early days, the Bureau’s investigation under the newly empowered Competition Act is the beginning of a new era of robust enforcement against anticompetitive behavior in not just the grocery sector but the economy writ large.

A New Front in the War Against Google’s Ad Dominance

Google’s monopoly in digital advertising is finally getting the attention it deserves. This week a coalition of anti-monopoly groups launched USvGoogleAds, a comprehensive resource providing updates on the ongoing international scrutiny of Google’s dominance. Though focused on the U.S. Department of Justice’s (DOJ) upcoming antitrust trial, the site is also an opportunity to synthesize the international efforts against Google's global ad dominance.

In the DOJ case Google stands accused of illegally monopolizing the digital advertising industry, exerting what has been described as mob-like control over ad revenue distribution. But the effects of this monopoly and the antitrust response are far-reaching. This week, CAMP Executive Director Keldon Bester wrote in the National Post how the Competition Bureau’s recently expanded Google investigation is a win for Canadian publishers and advertisers.

The expanded investigation is another signal of the shift towards more aggressive antitrust enforcement in Canada. The probe examines Google's control over various aspects of the digital advertising supply chain, including sell-side platforms, buy-side platforms, and ad exchanges. While Canadians will have to wait for the outcome of the investigation, the Bureau has a real chance to rebalance the relationship between Canada’s ailing news organizations and the elephant in the digital advertising market.

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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June 23, 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:

• Bold competition reform becomes law with the passage of Bill C-59
• Commissioner Boswell says competition is the key to productivity woes
• FTC and DOJ focus efforts on Adobe’s deceptive subscription practices

Let's dive in.

Bill C-59 Marks Canada's Ambitious Competition Reform

In welcome news ahead of Parliament’s summer break, Canada's competition landscape has been dramatically reshaped with the passage of Bill C-59, signalling the end of Canada’s pro-consolidation era and the setting the foundation for a fair economy. The legislation, which received royal assent on June 20, 2024, introduces sweeping reforms to the Competition Act, including new merger review safeguards, the ability for individual companies to fight back against monopolists, and closing the loophole that left Canadians on the hook for $13 million of telecom giant Rogers’ legal bills.

It goes without saying that CAMP is thrilled to see these long-overdue reforms become reality. "The passage of C-59 is an extremely welcome development and the culmination of years of effort to improve competition in Canada," said Keldon Bester, Executive Director of CAMP, in a statement. "The reforms in C-59 are the best defense against further consolidation at the expense of Canadians and a strong message that fair competition is the way forward for our economy." We at CAMP are particularly encouraged by the cross-partisan support for these changes, demonstrating a shared understanding of the need to protect Canadians from the negative effects of undue corporate concentration.

While a necessary steps, strong laws are only the first step towards a fairer economy in Canada. Echoing CAMP testimony to the House Standing Committee on Industry and Technology, laws are only as good as their enforcement, and the Competition Bureau must be ready to accept the responsibility of a larger role in Canadian economic policy. Long held back by laws designed by the businesses it was intended to police, the Competition Bureau must now chart a more assertive and transparent course as Canada’s competition cop.

Commissioner Boswell: Competition is the Way Forward on Productivity

This week, Matthew Boswell, Commissioner of Competition, argued in the Globe and Mail that increased competition is the key to unlocking productivity growth and improving living standards. To make his claim, the Commissioner points to evidence showing competitive markets drive innovation, investment, and economic performance. Adding to a chorus that includes institutions like the Bank of Canada, the Commissioner’s call lands as Canadian policymakers consider paths forward from our post-pandemic inflection point.

To reverse Canada’s productivity crisis, Boswell proposes three main ideas: reviewing existing regulations through a competition lens, setting clear and ambitious targets for change, and investing in institutions and research to support competition-focused initiatives. These steps could lead to significant economic gains, potentially increasing GDP by 2.5% or more, as seen in Australia.

While Boswell correctly takes a broader view of Canada’s economic policy, we cannot lose sight of the role of enhanced enforcement of the Competition Act in reversing Canada’s slide into monopoly. Canadians have entrusted the Competition Bureau with the improved toolkit the enforcer has pushed for, and it is now incumbent on the bureau to reward consumers, workers and entrepreneurs for that trust.

FTC and DOJ Go After Adobe's Subscription Hoops

The Federal Trade Commission (FTC) and Department of Justice (DOJ) have launched legal action against Adobe Inc. and two of its executives for alleged deceptive practices related to subscription cancellations and hidden fees. The move comes at a time when Adobe is already under fire for its maximalist approach to the use of creative’s content for AI training, building on a long history of squeezing the creative community for access to its tools.

The complaint alleges that Adobe deceived consumers by inadequately disclosing costly early termination fees associated with their "annual paid monthly" (APM) subscription plan and by making the cancellation process unnecessarily complicated. This fee, amounting to 50% of the remaining monthly payments if canceled within the first year, is often only discovered by consumers when attempting to cancel their subscription.

Consumers attempting to cancel their Adobe subscriptions have also reported numerous obstacles, including navigating multiple web pages, re-entering passwords, and being forced to engage with retention offers before cancellation. Rather than build services that provide value to customers, Adobe seems content to engage in the classic monopolist practice of testing the patience and stamina of users trying to exit their walled gardens. The Adobe case is a signal to companies that rather than perfecting dark patterns, companies should focus on competing for users’ hard earned money.

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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