Letters: Canada Gets Real on Competition
June 23, 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.
Bill C-59 Marks Canada's Ambitious Competition ReformIn 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 ProductivityThis 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 HoopsThe 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 |
Competition Law Turns the Corner in Canada with the Passage of Bill C-59
June 21, 2024 - As Parliament adjourns for the summer, Bill C-59 received royal asset and was made into law. Included in C-59 are the second flank of the government's amendments to the Competition Act after the passage of Bill C-56 late last year. C-59 takes a number of positive steps to strengthen Canada's competition law, including:
- Introducing safeguards against mergers in already concentrated markets
- Ensuring remedies for harmful mergers actually restore competition
- Bringing effects on workers into analysis of potentially harmful mergers
- Allowing private parties to bring cases against corporations harming competition
- Closing the loophole that stuck Canadians with the legal bills of telecom giant Rogers
Along with C-56 passed late last year, C-59 represents the most material improvements to the Competition Act since its introduction in 1986. Departing from the pro-consolidation stance of the past four decades, Canada's reformed competition presents a much stronger stance against abuses of concentrated economic power.
C-59 also reflects the cross-partisan support for stronger competition law in Canada. Like C-56, the Competition Act reform components of C-59 received unanimous support from federal MPs. Amid rising political polarization, elected officials of all stripes understand the need for laws that truly protect Canadians amid the ongoing cost of living crisis.
"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. "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 way forward for our economy. Now the hard work begins to enforce these laws to the benefit of all Canadians."
Letters: Big Bank Squeeze
June 16, 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.
Canada's Big Banks Squeeze Amid Junk Fee BacklashIn a recent column for Corporate Knights, CAMP executive director Keldon Bester took aim at the billions in excess profits squeezed annually by Canada's Big Five banks. Bester argues the higher fees Canadians pay for everything from monthly account fees to non-sufficient funds charges and the widening gap between saving and lending rates stem from the banks' oligopoly power, with the Big Five controlling 90% of the market. Citing consulting firm North Economics, Bester notes Canadians pay $8.5 billion more per year in bank fees compared to consumers in the UK and Australia. This amounts to about $250 per Canadian. Beyond fees, the growing gap between the low interest rates banks pay to savers and the rates charged to borrowers is also quietly squeezing billions from Canadians, with the banks pulling in an additional $5 billion since the Bank of Canada began raising interest rates. To remedy the situation, Bester argues policymakers need to tackle the banks' market power to enable more choice and higher value for savers and borrowers. Initial steps are underway, such as open banking and curbs on non-sufficient funds fees, but it will take much more to roll back the power of Canada’s Big 5. In the U.S., the Consumer Financial Protection Bureau and Federal Trade Commission have launched sweeping measures to eliminate so-called junk fees across not just banking, but airlines and hotels as well. Addressing useless fees that drive up costs for consumers is one step towards a fairer economy, but tackling the power that allowed those fees to be charged in the first place remains the top priority. Competition Bureau Intensifies Scrutiny of AmazonThe Competition Bureau has obtained a second court order as part of its ongoing investigation into Amazon's potentially false or misleading marketing claims related to the reviews and prominence of products on its marketplace. Recently covered by the podcast Lately hosted by CAMP Advisory Board member Vass Bednar, the wild west of online reviews has become an increasingly important battleground for consumers. As the importance of reviews to consumers has increased, so too have efforts to game the systems and deceive customers. While e-commerce platforms have an interest in maintaining a healthy review ecosystem, incentives remain to use those review systems to tip the scales in favour of dominant platforms. While the scrutiny of review systems is welcome, the real test of the Competition Bureau's new powers will be an abuse of dominance investigation into the power wielded by Amazon in e-commerce and the sprawling markets it looms over. Though the Bureau canvassed Canadians about these practices in 2020, the enforcer has been radio silent since. Is "Acquire and Deny" the New "Embrace, Extend, Extinguish"?Silicon Valley's cycle of creative destruction, where startups disrupt incumbents with new technologies, is breaking down. In a guest essay for the New York Times, professors Mark Lemley and Matt Wansley argue that tech giants like Google, Microsoft, Amazon and Apple are co-opting this process by acquiring or licensing technology from AI startups before they can become significant competitive threats. While providing needed funding for startups in the short-term, in the long-run this consolidation harms innovation by blunting the competitive process. Recognizing this worrisome trend, the FTC is now probing Microsoft's $650M licensing deal with Inflection AI, which coincided with Microsoft poaching most of Inflection's engineers, and U.S. antitrust enforcers have divvied up efforts investigating the raft of Big Tech partnerships and investments with AI startups. Canada's Competition Bureau should follow the FTC's lead in scrutinizing Big Tech's investments in and acquisitions of AI and other emerging technology startups. The acquisition of nascent competitors remains an open question in Canada’s competition law, and market studies could identify the need for enforcement or policy actions to maintain a competitive environment. If you have any monopoly tips or stories you'd like to share, drop us a line at hello@antimonopoly.ca |
Canadian Western Bank shares soar after National Bank tie-up announced
Yahoo! Finance
The deal doesn’t raise the same concerns that RBC’s acquisition of HSBC Canada did, said Keldon Bester, executive director of the Canadian Anti-Monopoly Project.
“This isn’t the largest financial institution purchasing a really differentiate competitor where there are overlaps.”
How the Big Five banks are quietly squeezing billions out of Canadians
Canada's banking sector has a monopoly problem. In contrast with the top five banks in the United States, which hold just over a third of the market, Canada’s Big Five famously dominate around 90% of the market for financial services. They’re also some of the most profitable on the planet, with their Canadian personal and commercial banking services regularly notching profit margins north of 30%. For Corporate Knights, CAMP Executive Director Keldon Bester lays out the cost of the banking oligopoly to Canadians.
Read the full article here.
CAMP Opening Statement to the House Standing Committee on Industry and Technology (INDU) on its Study of Bill C-352
Thank you to the committee for inviting me to speak with you today.
My name is Keldon Bester and I’m the Executive Director of CAMP, a think tank dedicated to addressing the harms caused by monopoly and to building a more democratic economy in Canada. We appreciate the opportunity to appear before this committee to discuss the proposed amendments to Canada’s competition law contained in C-352.
After nearly four decades of pro-consolidation law, Canada is turning the corner on competition policy. With the passage of C-56 late last year, and C-59 being studied in the Senate, this government and in fact all parties have made much-needed improvements to Canada’s competition law. Canada is now on track to have a tougher stance against harmful takeovers, abuses of corporate power, and practices designed to deceive consumers.
But these changes should be understood as the first step in rebalancing the relationship between dominant corporations and Canadian consumers, workers and entrepreneurs. The work of improving competition in Canada is just beginning.
As important as strong laws are, just as important is the effective execution of those laws to the benefits of Canadians. The Competition Bureau is putting the powers gained through C-56 to work in investigating the use of property controls to harm competition in the grocery sector. Along with the recently opened market study into Canada’s airlines, the investigation is an early sign that the Competition Bureau understands that its efforts need to be focused where competition matters most to Canadians.
These efforts raise an important point for future of Canada’s competition law - the need for the quick resolution of competition issues and greater transparency into the work of the Competition Bureau.
Our strengthened laws cannot help Canadians unless they can quickly address practices that harm competition. Today, competition law investigations are a multi-year process. The ongoing investigation into Google’s practices in the digital advertising market has been expanded after four years of investigation, with no timeline for the conclusion of this expanded investigation. While the update is welcome, for news organizations dependent on a competitive advertising market, another four years is likely too late.
When investigations become litigation, Canadians can expect to wait another three to seven years for resolution of practices harming competition. If property controls are indeed weakening competition in the grocery sector, Canadians should not have to wait up to a decade for more competition in such a critical market.
Accordingly, the committee should consider ways in which the investigation and litigation processes could be reformed to speed up the resolution of competition cases.
One step would be to improve the information gathering powers of the Competition Bureau, with powers akin to those of the Office of the Privacy Commissioner and other international competition authorities. If an investigation leads to litigation, the ability to stop parties from engaging in potentially problematic conduct while the litigation is ongoing should be strengthened. Finally, to ensure speedy resolution of cases either way, the litigation process should be streamlined and the future role of the Competition Tribunal should be a topic of study.
Along with more rapid resolution of competition issues, Canadians also deserve greater transparency into the activities of a now strengthened Competition Bureau. Balancing the needs of confidentiality and accountability, Canadians should not be left in the dark on the investigations the Competition Bureau is currently engaged in.
A positive step in this direction would be to repeal language in the Competition Act that requires investigations to be conducted in private, which currently introduces ambiguity with the Competition Act’s existing confidentiality requirements. While this would still leave transparency in the hands of the Competition Bureau, it would be a clear signal of a desire for greater transparency and a first step towards a Competition Bureau that is more open with Canadians.
The work of this committee has resulted in a competition law better equipped to protect Canadians from abuses of concentrated corporate power. A necessary next step is to improve the systems responsible for executing that law.
Thank you for your time and I look forward to your questions.