May 19, 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:

• Grocery giant Loblaw agrees to participate in industry-led grocery code
• Google flexes its control over the guest list at non-profit conference
• U.S. Supreme Court defends financial watchdog against legal attack

Let's dive in.

Loblaw Agrees to Grocery Code, but Competition Issues Remain

Amid public pressure from a consumer boycott against the grocer, Loblaw Companies Ltd. has agreed to abide by a proposed grocery code of conduct, following years of resistance from the country's largest grocers. This move comes as a response to growing pressure from suppliers and the government to address unfair practices and power imbalances in the industry. By improving transparency, fair dealing, and dispute resolution between retailers and their suppliers the code aims to create a more balanced relationship between a diverse marketplace of suppliers and Canada’s grocery giants.

While Loblaw's decision is a step in the right direction, work remains to be done to create genuine competition in Canada's food system. The Competition Bureau's 2023 report highlights the need for additional measures to increase choice and lower prices for consumers in the wake of decades of consolidation. These include reducing barriers to entry for new competitors, promoting innovation and differentiation among retailers, and addressing the concentration of power among a handful of dominant players.

But to truly transform Canada's grocery sector, policymakers must go beyond industry-led codes of conduct and take bold action to dismantle the power that has been allowed to take root in Canada’s food system. Beyond introducing more competition at the retail level, policymakers must look further up the supply chain and tangle with the consolidation that has been allowed to occur behind the backs of Canadians. To do so will require putting Canada’s strengthened competition laws to work, empowering regulators to take on abusive practices that choke off competition and encouraging the growth of independent and diverse alternative business models.

Agreeing to the grocery code is a good start, but real change will require more than companies responding to their latest PR crisis.

Google Blocks Balsillie

The guest list gives you power. That was clear this week as Google blocked Jim Balsillie, the former co-CEO of BlackBerry and frequent Big Tech critic, from delivering a keynote speech at the Canadian RegTech Association Annual Summit, which was to be held at Google's Toronto offices. The search giant refused to approve Balsillie's appearance, despite initial support from Google Canada employees, claiming they "preferred other speakers."

The move by Google to control debate and discussion at a not-for-profit event, has drawn sharp criticism. Senator Colin Deacon slammed Google's actions, saying it proves the case of those who believe Big Tech's power must be curtailed. The move is reminiscent of the 2023 University of Toronto Law School Amazon funding scandal, where among other things Amazon’s undisclosed support allowed it to control the speakers list for events discussing competition policy at the law school.

The Balsillie incident underscores why Canada must chart its own course in developing a more sovereign and democratic economy. The federal government has taken the first step in making critical competition law reforms, but work remains to truly reset the balance of power between Canadians and global corporate giants. Regulators must be emboldened to use new legal tools to promote fair competition and innovation that benefits all Canadians, not just the monopolies that control the guest list.

U.S. Supreme Court Defends Financial Watchdog

This week the U.S. Supreme Court handed the Consumer Financial Protection Bureau (CFPB) a major victory, ruling 7-2 that the agency's funding structure is constitutional. This resolves a key legal challenge that had been holding back the CFPB's efforts to crack down on a wide range of predatory practices by financial corporations like payday lenders offering high-cost loans to vulnerable borrowers. With this legal uncertainty removed, the CFPB is now poised to aggressively resume its regulatory agenda.

Consumer advocates praised the ruling as a "resounding victory" ensuring the CFPB can continue its vital mission of protecting Americans from abusive financial practices. Meanwhile, financial industry lobbyists warned the decision would unleash a rogue agency with vast unchecked powers. Financial institutions in the regulators' sights hoped the case would defang the CFPB, but now they face a newly emboldened regulator.
The CFPB case is part of a broader legal battle over the power of federal agencies as big business increasingly pushes back against government efforts to rein in market dominance. Google, for example, just tried to short-circuit an FTC antitrust lawsuit by preemptively paying the maximum potential damages upfront. While the move may let Google avoid a jury trial for now, it's unlikely to halt growing bipartisan momentum for stronger oversight of Silicon Valley giants.

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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May 12, 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:

• Competition Bureau aims new market study powers at Canada’s airline market
• Microsoft shutters successful game developers in the wake of Activision acquisition
• Apple makes it a little too obvious with its most recent iPad commercial

Let's dive in.

Competition Bureau Looks to the Skies in New Market Study

Fresh off the heels of its deep dive into Canada's grocery sector, Canada’s Competition Bureau is turning its sights on competition in the airline industry. The market study comes at a critical time, with the recent shutdown of low-cost carrier Lynx Air after just two years of operation highlighting the long-standing barriers to competition in a market dominated by the duopoly of Air Canada and WestJet.

What makes this airline industry probe noteworthy is that the Bureau will be flexing new regulatory muscles for the first time. Amendments to the Competition Act that became law late last year have armed the watchdog with stronger tools, in line with international counterparts. This allows the Bureau to compel information from companies to inform market studies, rather than just asking nicely and hoping for the best as it had in the past.

With these enhanced powers, the Bureau can actually conduct a comprehensive examination of the competition issues plaguing Canada's airline sector, digging into areas like pricing strategies, potential collusion between major carriers, the impact of mergers and acquisitions, and how policy changes might spur more competition.

The outcome of this investigation remains to be seen, but it has the potential to be a watershed moment for competition in Canadian aviation. Armed with its new regulatory arsenal the Competition Bureau could identify serious competition issues and push for reforms to inject rivalry into the market and improve affordability and choice for travelers.

Microsoft Shutters Successful Studios, Torches Games Industry Credibility

Last week, Microsoft made the surprising announcement that it would be shutting down several of its Bethesda game studios, including Tango Gameworks (Hi-Fi Rush), Arkane Austin (Redfall), Alpha Dog Games (Mighty Doom), and Roundhouse Studios. While the official reason given was that Xbox and Bethesda's studios had become overextended, former Microsoft PR manager Brad Hilderbrand provided additional spin on the rationale behind these closures.

The first issue is the Game Pass subscription model that Microsoft has dived head first into for its gaming business. While Game Pass has been successful in attracting subscribers, it has meant new games miss traditional sales goals as players opt to play them as part of their subscription rather than purchasing them outright. This creates a situation where even studios that create popular and critically acclaimed games like Hi-Fi Rush only receive a small revenue bump from being featured on Game Pass before quickly falling off the radar.

The second factor is Microsoft's $70 billion acquisition of Activision-Blizzard which closed late last year. In the wake of the megamerger, despite promises made to studios, gamers and regulators, there is now immense pressure on Microsoft to start recouping those costs and drastically cut expenses from its game division.

The combination of factors means that while Activision mega-franchises like Call of Duty are likely to weather the storm, smaller studios creating unique and interesting games under the Microsoft mothership are at risk of being casualties of the giant’s shifting priorities. While these closures are part of broader struggles within the games industry, they show how empty the promise of consolidation is to the future of one the largest entertainment markets on the planet.

Too on the Nose?

Apple's recent "Crush" ad for the new iPad Pro has struck a chord at a time when a handful of technology giants loom large in our economies. The ad, which features a hydraulic press crushing various artistic tools and entertainment relics, struck a nerve with creatives who saw it as a tone-deaf symbol of Apple’s derision for the mediums they rely on for self-expression and their livelihoods.

But the backlash is not just about a single misguided marketing campaign, but rather a growing unease with the dominance of tech giants like Apple in our daily lives. As these companies continue to expand their reach and influence they risk crushing the diversity and individuality that defines human creativity. With its literal depiction of the destruction of instruments, art supplies and arcade machines to make way for a sleek, homogenized product, the ad was simply too on the nose about the looming power of current day Apple.

While Apple decided to pull the ad, the underlying issue that brought the controversy remains. Around the world we continue to grapple with the impact of monopolies on our society. The “Crush” ad was just a PR misstep. Only structural change to our economies can push back against the forces that seek to flatten and homogenize our world.

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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May 5, 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:

• University of Saskatchewan researchers find a much higher price tag for Bunge-Viterra
• Poilievre calls out big business lobbyists for ignoring everyday Canadians
• Closing arguments heard in U.S. Google search monopolization case

Let's dive in.

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Grain Drain: Researchers Find Bunge-Viterra Could Cost Canadian Farmers $700 million

Last week we covered the Competition Bureau’s opposition to the Bunge-Viterra takeover, where the Bureau estimated that the transaction could cost Canadian farmers $20 million annually. This week, a comprehensive report from professors at the University of Saskatchewan provides analysis that paints a much starker picture of the potential financial implications for farmers.

The report estimates that the merger could cost grain farmers over $700 million annually, an order of magnitude higher than the Bureau’s estimates. The study also highlights the potential impact on individual farmers, suggesting that Western Canadian wheat growers could see their annual income drop by thousands due to higher margins extracted by the merged agricultural giant. Similarly, a canola farmer in Saskatchewan might lose tens of thousands of dollars annually as higher costs are compounded by the risk that plans for a new local processing facility are scrapped.

This transfer of wealth from farmers to the merged agricultural giant would make it harder for those farmers to invest in their operations, support their families, and contribute to their local economies. The report finds that a merged Bunge-Viterra would handle over 40% of Western Canada's grain, leading to market power imbalances and reduced bargaining power for farmers.

As regulators continue to scrutinize the proposed merger, the report provides a data-driven foundation for assessing the potential consequences for individual farmers and the agricultural industry as a whole.

Poilievre Says Ottawa Bubble Must Win Over Main Street

Conservative party leader Pierre Poilievre penned an op-ed this week urging corporate Canada to stop relying on lobbyists and instead focus on winning public support for their policy proposals. Poilievre’s call comes as domestic big business lobby groups argue that Canadian policy makers should abandon efforts to bring home meaningful competition law reform despite clear support for a harder line against monopolies amid the rising cost of living.

The message is particularly well-timed as the effort to quash Canada’s competition revival becomes increasingly international. This week the Information Technology and Innovation Foundation (ITIF), an American think tank funded by some of the largest corporations on the planet, launched its Center for Canadian Innovation and Competitiveness. ITIF has been a staunch opponent of ramped up antitrust enforcement in the U.S. and has attempted to push back on recent Canadian efforts to strengthen our weak competition laws.

To truly benefit workers, consumers, and entrepreneurs, Canada needs a policy agenda that addresses the growing concentrations of economic power stifling the dynamism of our economy. This means promoting fair competition, reducing barriers to entry, and ensuring that public policy is guided by the interest of the public, not dominant players.

Poilievre's call for businesses to engage directly with the public is a step in the right direction, but it must be accompanied by a commitment to fostering a more dynamic and competitive economy. Only this kind of economy can ensure that its benefits are shared widely and that every Canadian has the opportunity to succeed that they deserve.

Judge Hears Closing Arguments in Google Search Case

The U.S. Department of Justice (DOJ) and Google's legal team faced off in a final showdown this week, presenting starkly different narratives in the closing arguments of the antitrust case targeting the tech giant's dominance in the market for online search.

The DOJ, which filed the case back in 2020, argues that Google illegally abused its monopoly power to maintain its grip on the market and stifle competition. With an 89% market share in general search as of 2020, the government contends that Google has preserved its dominance through exclusive distribution agreements with device makers, carriers, and Apple, relying on the "power of defaults" to keep users locked into its ecosystem. The DOJ claims these practices have deprived rivals of the scale necessary to compete effectively, reduced Google's incentive to innovate, and ultimately resulted in slower, less accurate search results and higher advertising prices for users.

Google, unsurprisingly, painted a very different picture in its closing arguments. The company maintains that it faces robust competition from a wide array of online rivals beyond just traditional search engines, that any barriers to entry are insignificant, and that its agreements and conduct are justified by legitimate business reasons that benefit consumers.

The outcome of this case will have far-reaching implications not just for Google, but for the future of competition in the digital economy. For advocates of fair and competitive marketplaces, the stakes couldn't be higher as we await Judge Mehta's decision in the coming months.

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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