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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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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