Competition Bureau launches probe into Canadian airline industry
The Toronto Star
“If we’d had these rules in place for the grocery study, we could have had a product by produce look at the margins, potentially,” said Bester. “In other jurisdictions, these market studies have formed the basis for real change.”
Letters: Land Grab
June 9, 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.
Housing to Harvests: Investors' Growing Appetite for Canadian Real EstateWhile grocers get the lion share of the attention, corporate concentration is an issue at all levels of the food system, often at the expense of farmers and consumers. This week brought evidence that this concentration is extending well beyond the grocery shelves and into the very land that farmers rely on to produce their crops. As reported by CBC News, an influx of investment corporations like Bonnefield is making it increasingly difficult for young farmers to acquire farmland, potentially jeopardizing the future of independent farming in Canada. With over $1.4 billion in assets across seven provinces and 140,000 acres of farmland, Bonnefield's growing portfolio is a testament to the shifting landscape of Canadian agriculture. And it’s not just happening in Ontario. Researchers have revealed similar troubling patterns emerging in the Prairies, the home of the majority of Canada’s arable land. The trends of farm consolidation, land concentration, and growing investor ownership are leading to growing power imbalance in the food system. These changes mirror the investor-driven transformation seen in the urban real estate market, with the benefits accruing to a select few at the cost of many. As farmland prices continue to soar beyond their productive value, new farmers face daunting barriers to entry. This is evident in the unprecedented levels of farm debt and dwindling rural populations as more farmers call it quits amid these pressures. The growing dominance of institutional investors in farmland ownership is not only pricing out young farmers but also jeopardizing the social, economic, and environmental sustainability of Canada’s agricultural base. Pushing back against consolidation at every level of the farm system is key to preserving equitable land access for farmers, sustainable livelihoods, and valuing farmland for its social and ecological worth, not just its productive capacity. Competition, Not Consolidation, is the Way Forward for EuropeAs Europe grapples with its future direction, prominent leaders like Enrico Letta, Mario Draghi, and Emmanuel Macron are advocating for a misguided solution: corporate consolidation. In a recent ProMarket article, Open Markets’ Max von Thun contends that facilitating the creation of "European champions" through lax competition enforcement could actually undermine the EU's economic prosperity and democratic integrity. Von Thun dismantles the argument that coddling corporate giants is the path to prosperity and resilience. He points out that Europe already suffers from weak competition in many sectors, with negative consequences for innovation, consumer welfare, and economic resilience. Further consolidation would only exacerbate these issues. Instead, he argues the solution lies in more unified economic unification through regulatory alignment and deeper capital markets, while maintaining robust competition enforcement. This is the vision Canada should embrace as we modernize our own competition laws and set the foundation for our future economy. The goal should be an economy where power is shared more equitably, not concentrated in the hands of a few behemoths under the guise of national security concerns. By resisting the temptation of consolidation and instead promoting open, dynamic markets, we can foster a more innovative and resilient economy. DOJ and FTC Set Sights on AI PartnershipsA major lesson from the global antitrust resurgence is that if given a free pass, once dynamic markets can quickly become captured by a small handful of major firms. Learning that lesson, this week the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) reached an agreement to divide responsibility for investigating the conduct of leaders in the AI space like NVIDIA, Microsoft, and OpenAI. Under the arrangement, the DOJ will take the lead in examining whether NVIDIA, the world's leading manufacturer of AI chips, has violated antitrust laws. With a market share of roughly 80% and a market capitalization surpassing $3 trillion and on track to being the world’s most valuable public company, NVIDIA's dominance has raised concerns about unfair competitive practices such as locking customers into using its chips and controlling their distribution. Meanwhile, the FTC will focus its attention on Microsoft and OpenAI. Microsoft's $13 billion investment in OpenAI, the creator of the popular ChatGPT chatbot, has drawn scrutiny over the potential for the tech giant to exert undue influence over the AI market. The FTC is also investigating whether Microsoft structured its deal with OpenAI in a way that allows it to avoid direct regulatory review. The intensifying regulatory scrutiny comes amid growing concerns about the concentration of power in the AI industry and the potential for already-dominant firms to leverage their market position in data and computing power to control emerging markets. As U.S. antitrust chief Jonathan Kanter warned, "AI relies on massive amounts of data and computing power, which can give already dominant firms a substantial advantage." It’s the job of regulators to ensure that advantage is not abused. If you have any monopoly tips or stories you'd like to share, drop us a line at hello@antimonopoly.ca |
Broken dreams and sky-high prices: US and Canada say enough’s enough
GZERO
Bester points out that there’s an important distinction between legislation that empowers action against anti-competitive behavior and the actual enforcement of laws against monopolies. He notes that the US hasn’t actually passed more effective and modern anti-monopoly laws but adds that “Biden, and even presidents before Biden, have ratcheted up enforcement of existing laws.”
Algorithms are raising prices for everything. This must stop
The Globe & Mail
Vasiliki (Vass) B. raises concerns about the growing use of algorithmic pricing, where companies use software to monitor competitors and automatically adjust their own prices in response.
While marketed as tools for efficiency or competition, these algorithms can lead to higher prices across entire markets without any direct communication between companies. She argues that this form of digital price coordination amounts to a new kind of collusion that current Canadian laws are not equipped to handle. With prices already squeezing consumers, she calls for urgent regulatory action to address these invisible but powerful forces shaping what people pay.
Letters: Fighting Unfair Competition
June 2, 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.
Putting a Lid on Unfair Competition in GroceryLast week we talked about the importance of the Competition Bureau’s investigation into the use of property controls by Loblaws and Sobeys in showing Canadians that the bureau’s new powers were being put to use to the benefit of Canadians. But in addition to that, the investigation is also a crucial step in defining what we consider fair and unfair competition in the Canadian economy. Appearing on the Big Story podcast, Jennifer Quaid, associate professor at the University of Ottawa's Faculty of Law, explained how the property controls imposed by Loblaws and Sobeys can be used by the dominant grocers to impede competition and maintain their market power. In the world of competition, conduct interfering with the competitive process is often referred to as anticompetitive. But while the practice of property controls may harm consumers, workers, and other businesses, isn’t keeping your rivals out of prime real estate fiercely competitive behaviour? The Loblaws-Sobeys investigation highlights the importance of distinguishing between beneficial and harmful, fair and unfair competition. Fair competition is based on offering improvements to the market - lower prices, higher quality, and innovative products - in contrast to unfair competition which is based on simply exercising market power to the benefit of only incumbents. Given the current prevalence of oligopolies in Canada’s economy, defining and enforcing fair competition standards is particularly crucial to ensure these giants are unable to quash beneficial competition. The Loblaws-Sobeys investigation is an opportunity to spark a broader conversation about what constitutes fair and unfair competition. By drawing clear lines between acceptable and unacceptable practices, we can foster markets that better serve the interests of all Canadians. Canadian Law Firms Prepare for New Merger RealityCanada’s merger laws are about to get tough, and Bay Street is taking notice. This week, Stikeman Elliott LLP, a leading Canadian business law firm, released a new tool called the "Concentration Calculator" in response to proposed amendments to Canada's competition laws. The tool is designed to help businesses quickly assess whether their proposed mergers might exceed the new structural presumption thresholds and trigger a more rigorous review by the Competition Bureau. If the proposed amendments in Bill C-59 are passed, transactions that exceed certain market share or concentration thresholds will be presumed to be anti-competitive, shifting the burden of proof onto the merging parties to demonstrate that the deal will not harm competition. The changes represent an important step towards merger enforcement that recognizes the harms of mergers and halts the further concentration of Canada’s rolled up economy. But the calculator is more than just a glorified spreadsheet. It’s a sign that Bay Street is starting to take Canada’s competition reforms seriously. As the proposed amendments move closer to becoming law, we're seeing a shift in mindset among corporate Canada. Rather than buying up your competitors, actually competing for customers and market share must be the order of the day. Y Combinator Takes Fight for “Little Tech” to Capitol HillY Combinator CEO Garry Tan has set his sights on Washington, aiming to create a lobbying force for the interests of "Little Tech," the countless startups vying to unseat digital giants in burgeoning markets like AI. During a whirlwind two-day trip to the nation's capital, Tan met with key lawmakers and White House officials, and rallied startup founders to join his cause. With the help of Luther Lowe, Y Combinator's head of public policy and a veteran of the anti-monopoly movement, Tan hopes to unite venture capitalists and progressive tech advocates to challenge the entrenched interests of Big Tech in Washington. Canadian startups should take note of Tan's efforts. While the regulatory landscape may differ north of the border, the stakes are just as high. By engaging with policymakers and advocating for fair competition, Canadian entrepreneurs can help break with our monopoly past and build the foundation of a diverse and vibrant economy. If you have any monopoly tips or stories you'd like to share, drop us a line at hello@antimonopoly.ca |
Letters: Bureau Goes After Grocery Giants
May 26, 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.
Bagging the Big Guys: Loblaws and Sobeys in Competition CrosshairsCanada's Competition Bureau has launched investigations into the parent companies of grocery chains Loblaws and Sobeys for alleged anticompetitive practices, putting to work the new powers given to the bureau last year. Federal Court documents reveal that the probes focus on the companies' use of property controls to hinder competition in the retail grocery sector by preventing the entry and expansion of competing retailers. The Commissioner of Competition argues that these property controls limit the activities of potential tenants and competitors, effectively stifling competition in the grocery market. While Loblaws' parent company, George Weston Ltd., is cooperating with the review, Sobeys' owner, Empire Co. Ltd., is contesting the inquiry, labeling it "unlawful" and driven by political pressure. The bureau's investigation scrutinizes two types of property controls used by the grocery retailers across Canada: restrictive covenants that limit land use even after ownership changes and exclusivity clauses in commercial leases that dictate who landowners can lease to and what products can be sold near another leaseholder's business. In a press release marking the confirmation of the investigation, CAMP Executive Director Keldon Bester said that “after years of bearing the brunt of the rising cost of living, Canadians deserve to see the new powers they gave the Bureau put to work.” Bureau's Airline Probe Experiences Government TurbulenceAs previously covered by CAMP, the Competition Bureau is currently engaged in a market study of Canada’s airline sector, making use of new powers granted to the enforcer last year. While the move to grant the powers was an important step by the government to strengthen Canada’s competition law, messaging from the government, including a letter from Industry Minister François-Philippe Champagne, show a hesitance for the bureau to dive deep into the issues affecting the industry. Champagne’s letter emphasizes the government's awareness of competition issues and legislative efforts to empower the bureau, but emphasizes procedural guardrails and seeks to limit the scope of the study, suggesting questions of airport governance be excluded. The bureau’s study has the potential to uncover serious competition issues such as predatory pricing, but the government’s response seems to be an initial shot across the bow that it expects the bureau to stay in its lane. As the study progresses, it is crucial for the Competition Bureau to maintain its independence, and ensure that its findings lead to meaningful reforms. Only then can the objectives of lower prices and improved services for Canadian air passengers be realized. Curtain Call on Live Nation's Entertainment MonopolyThe U.S. Department of Justice has filed a civil antitrust lawsuit against Ticketmaster and its parent company Live Nation Entertainment this week, accusing the company of abusing its dominant market position at the cost of concertgoers and artists. This legal action comes after years of complaints from fans, artists, and venues about Ticketmaster's practices, including high fees and aggressive tactics to maintain its market share. According to the lawsuit, Ticketmaster has engaged in a variety of anticompetitive practices, such as forcing venues to use its services exclusively, retaliating against venues that use competing ticketing services, and using its control over major artists to pressure venues into long-term contracts. These actions have made it difficult for competitors to enter the market and have led to higher prices and lower quality service for consumers. The Justice Department's action could lead to major changes in the industry, including the breakup of Ticketmaster and Live Nation, which merged in 2010 despite concerns about the impact on competition. Surprising few, rather than hurting competition, Ticketmaster and Live Nation argue that their business practices are not only lawful, but have been beneficial to the entertainment industry. Tell it to the judge. If you have any monopoly tips or stories you'd like to share, drop us a line at hello@antimonopoly.ca |