April 28, 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:

• Bureau comes out against Bunge-Viterra, Transport Minister holds final call
• Biden admin antitrust expert Tim Wu weighs in on Canada’s competition crisis
• U.S. FTC moves to ban non-competes that limit worker mobility

Let's dive in.

CAMP Welcomes Competition Bureau Opposition to Bunge-Viterra

Another week, another multi-billion dollar takeover forecasted to kill competition. The latest example is in the agribusiness sector, with global grain giant Bunge’s plans to purchase competitor Viterra under scrutiny from the Competition Bureau.

​In a recent report, the Bureau found that “the transaction is likely to harm competition in markets for grain purchasing in Western Canada, as well as for the sale of canola oil in Eastern Canada.” The Bureau notes that Bunge’s control of another one of Viterra’s competitors, G3, would give Bunge the ability to coordinate between the two at the expense of Canadian farmers.

Farmers have reacted positively to the strong stand from the competition watchdog. President Ian Boxall of the Agricultural Producers Association of Saskatchewan supported the Bureau’s findings in a statement to CochraneNow: “This merger is not good for producers. It is not good for rural economies and it is not good for Saskatchewan. The only people that are gonna benefit from this merger are the shareholders of Bungie and Viterra.”

While the Bureau’s opposition is a positive step, the decision ultimately rests on Minister of Transport Pablo Rodriguez, who has jurisdiction over the merger given the merging parties’ port infrastructure holdings. But the transaction represents a chance to do things differently and protect Canadian farmers. “Bunge-Viterra represents another step towards harmful consolidation not just in Canada, but in global agricultural markets as well,” said Keldon Bester, Executive Director of the Canadian Anti-Monopoly Project. “In blocking this deal Minister Rodriguez has an opportunity to stand up for Canadian farmers and we encourage him to take it.”

Wu: Capitalism Without Competition is Exploitation

President Joe Biden's former antitrust adviser and CAMP advisory board member Tim Wu recently offered his perspective on the global competition challenge and Canada’s potential role in it. Wu served as special assistant to President Biden for technology and competition policy from 2021 to 2023 and was credited with being the architect of the Biden administration's competition and antitrust policies.

Wu advised Canada to "get away from consent decrees and start blocking mergers." He believed the concessions companies made to get deals approved were "too wimpy." Canada relies heavily on these agreements to settle merger issues and has never successfully blocked a merger through the courts.

Wu, who grew up in Toronto, saw a concerning tolerance in Canada for oligopolies and monopolies. He urged Canadian antitrust enforcers to be willing to take risks and bring cases even if there was a chance of losing. Competition Commissioner Matthew Boswell seems to be hewing to this advice, having recently tried to fully block the Rogers-Shaw merger and opposing Bunge's acquisition of competing grain giant Viterra. Boswell has also pushed for reforms to give the Competition Bureau additional powers to review and remedy anticompetitive mergers.

Wu framed the issue as one of economic democracy, warning that governments that ignored the public's concerns about competition would ultimately fall. As he put it, "Capitalism without competition, it's not capitalism. It's exploitation."

FTC says RIP to Non-competes

The U.S. Federal Trade Commission (FTC) has voted 3-2 to ban non-compete agreements for most workers across the United States. This landmark rule, set to take effect in late August 2024, is expected to liberate approximately 30 million Americans from restrictive employment contracts that limit their ability to work for competitors or start their own businesses.

Tech industry figures have been particularly supportive of the FTC's decision. That support is based on the belief that eliminating non-competes will spur innovation, boost wages, and lead to the creation of new startups by allowing talent to flow more freely between companies. Studies show that wages tend to rise in areas that prohibit non-competes, while they fall in jurisdictions that enforce them.

Wasting no time, the U.S. Chamber of Commerce and other big business lobby groups have vowed to challenge the FTC's rule in court, arguing that the agency has overstepped its authority and that non-competes are necessary to protect trade secrets and intellectual property. These legal battles could delay the implementation of the ban or potentially overturn it altogether, but the fight against the restriction of workers is one worth having.

In Canada, non-compete agreements are not outright banned at the federal level, but they are more difficult to enforce compared to the United States. Provinces like Ontario have led the way in prohibiting employers from entering into non-compete agreements with employees in the first place, with limited exceptions for executives and in the context of a sale of a business.

If you have any monopoly tips or stories you'd like to share, drop us a line at hello@antimonopoly.ca

Follow CAMP on Twitter LinkedIn Instagram or Facebook​

April 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:

• Budget 2024 keeps the heat on Canada’s concentrated grocery sector
• A new report shows how official statistics mask Canada’s wealth inequality
• U.S. labour movement gains steam with a major win in the deep south

Let's dive in.

Grocery Competition in the Spotlight in Budget 2024

While the biggest post-budget headlines have been captured by the federal government’s decision to increase the inclusion rate for taxation of capital gains, the hubbub has missed that Budget 2024 is keeping the pressure on Canada’s competition problem.

Squarely in the crosshairs of the government’s competition agenda is the grocery sector, where Canadians have seen the cost of everyday goods skyrocket. Despite crying poverty in front of parliamentary committee, the budget shows that the profits of grocery retailers have risen an astonishing 46% as Canadians continue to struggle to put food on the table. The situation in Canada stands in contrast with places like the UK, where healthier competition in the grocery space prevented retailers from pushing the cost of inflation on consumers.

While the government details a number of initiatives to improve competition, the first step is learning from our past mistakes. Over the last 40 years Canada’s weak laws allowed the grocery sector to consolidate, bringing us down from 8 to 5 major national chains. Last week CAMP Executive Director Keldon Bester appeared before the House Finance Committee in support of Bill C-59 and to argue for stronger protections against further consolidation of Canada’s economy. Structural presumptions, guardrails against mergers in already concentrated markets, are absent from Canada’s competition law and would be a powerful tool for preventing Canada’s oligopolies from rolling up their few remaining competitors.

How can you tell these presumptions will be effective? Lawyers are currently in the pages of the Globe and Mail arguing that they might block too many mergers. Given Canada’s track record of blocking approximately zero mergers we believe there is room for improvement.

Canada’s Billionaire Blindspot

Are we being kept in the dark about the true extent of wealth inequality in Canada? A new report from Social Capital Partners suggests the ultra-rich are hiding a massive concentration of wealth right under our noses.

The report shows how official Canadian data sources are severely underestimating just how much of the nation's wealth is held by ultra-high net worth individuals in Canada. By combining publicly available data with Statistics Canada's surveys, the report unveils a wealth inequality picture far more extreme than the official stats let on.

While StatsCan reports that the wealthiest 1% of Canadians control about 17% of total wealth of the country, the actual figure is more than 50% higher - closer to 26% of the country’s wealth. But it gets even more jaw-dropping further up the wealth pyramid. The top 0.1% ultra-elite aren't just well-off - they control over 12% of Canada's wealth, a figure three times higher than the official statistics would have us believe.

How can the data be so far off? It turns out StatsCan's methods are not up to the task of reflecting the deeply concentrated fortunes at the heights of our economy. Their wealth surveys conveniently miss familiar Canadian billionaire families like the Thomsons, Irvings, and Westons. By excluding the most recent iteration of Canada’s Family Compact official statistics paint too rosy a portrait of wealth inequality in Canada.

Beyond a call for more accurate statistics, the report is a reminder of the need for our commitment to healthy competition, fair markets, and widespread prosperity. Wealth is power, and its concentration raises fundamental questions about equal opportunity and the protection of our democratic ideals.

Labour Brings Home the Goods in Tennessee

In a landmark victory this week, workers at Volkswagen's Tennessee factory voted overwhelmingly to join the United Auto Workers (UAW) union, with 73% in favor. This marks the first time a foreign-owned auto plant in the South has unionized via election since the 1940s. The win is a major boost for UAW President Shawn Fain's campaign to unionize plants owned by over a dozen automakers across the U.S., including Tesla. The vote follows surging public support for unions and successful contract negotiations last year with the Big Three automakers.

Despite opposition from Volkswagen and Republican governors in six southern states, the UAW's victory is expected to bolster unionizing momentum beyond the factory floor. As Isaac Meadows, a VW plant worker who voted in support of the union, put it: "This is going to change the labor landscape across the country."

UAW's presence in nonunion factories across the American South has been a long-standing ambition, one that faced a significant test in this high-stakes election. The union pushed through setbacks in its past attempts to organize workers at the Chattanooga plant, including narrow defeats in 2019 and 2014 amidst a bribery-and-embezzlement scandal.

But the UAW has been making serious strides under its new leadership. Directly elected by its members for the first time, the union is now led by Shawn Fain who campaigned on a platform of reform and confrontation with automakers. Fain's tenure has seen the UAW successfully negotiate lucrative new contracts with Detroit's major automakers, which have included raising the wages of union employees by as much as 30% among other benefits.

If you have any monopoly tips or stories you'd like to share, drop us a line at hello@antimonopoly.ca

Follow CAMP on Twitter LinkedIn Instagram or Facebook​

April 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:

• CAMP urges Canadian MPs to enact Bill C-59’s competition law reform
• The UK’s competition authority outlines concerns with the market for AI models
• Pharmacy regulators push back against restrictive deals with insurance companies
• European civil society organizations calls for a rebalancing of corporate power

Let's dive in.

CAMP Calls on MPs to Bring Home Competition Reform

In a statement this week to the House Finance Committee, CAMP Executive Director Keldon Bester voiced support for the ambitious reform of Canada’s competition law proposed in Bill C-59. While C-59 makes important improvements to Canada’s competition law, CAMP highlighted the ability of individual companies to bring cases against competitive harms and inclusion of effects on workers in analysis of harmful mergers as particularly meaningful changes.

C-59 represents a generational change in Canada’s competition law, but room for improvement remains. Looking beyond C-59, CAMP put forward presumptions against mergers in already concentrated markets and more powerful remedies against harmful mergers as areas for future reform consideration. As with C-56, competition reform enjoys cross party support, with both Conservative, NDP and Bloc Québécois members pushing for a stronger response to complement reforms proposed by the Liberals.

With public frustration mounting over the cost of living in Canada, CAMP continues to push for laws that effectively police monopolies and promote a healthier business environment for all. As the legislative review continues, CAMP remains hopeful that Parliament will follow through on these calls for more competition in Canada.

UK Watchdog Homes in on AI Model Monopolization

The UK's Competition and Markets Authority (CMA) has raised alarms about the rapidly consolidating market for foundation models that power modern artificial intelligence systems. In a stark warning, the regulator pointed to a handful of deep-pocketed tech giants rapidly cornering this critical segment. Foundation models are the large language and computer vision models that form the basis for AI applications like chatbots, content filters, and automation tools. Monopolization risks limiting innovation and consumer choice as cash-strapped startups struggle to access and train competing models.

In response to these concerns, the CMA outlined potential interventions such as pooling data resources to level the playing field and requiring dominant players to license their models on fair terms. With AI positioned as a key economic battleground, the watchdog aims to promote conditions for an fair and open AI ecosystem that benefits businesses and citizens alike.

Provinces Push Back Against Pharmacy Lockdown Deals

A growing number of provincial pharmacist regulators are signaling their discomfort with the spread of exclusive deals between insurance providers and corporate pharmacy chains. These "preferred provider network" (PPN) arrangements restrict patients to using designated pharmacies to get their prescription drug coverage. The backlash intensified after Manulife, Canada's largest insurer, attempted to sign an exclusive PPN deal with Shoppers Drug Mart before walking it back amid public outcry. By restricting patient choice, regulators worry PPNs put business interests ahead of patient choice and quality care.

While some provinces cited limits on their authority to regulate insurers, the chorus of criticism from pharmacy watchdogs underscores the high-stakes battle over customer captivity in Canada's drug supply chain. As more companies explore lucrative PPN arrangements, provinces must move to safeguard patients' freedom to choose their pharmacists.

European Anti-Monopoly Groups Lay Out Vision to Curb Corporate Dominance

An audacious new report has delivered a clarion call for the European Union to get serious about tackling concentrated corporate power across its economic sphere. The "Rebalancing Europe" manifesto, backed by an array of civil society groups, lays bare the existential threats posed by monopolistic forces. From Big Tech's subversion of democracy to concentrated supply chains that imperil strategic autonomy, the report details how Europe is beset by excessive private dominance.

To reverse this state of affairs, the manifesto advocates for revamping competition policies and expanding the definition of harms over narrow consumer welfare standards. Specific proposals included granting regulators new industry-wide investigation powers, deploying tougher merger blocking and breakup orders and amplifying voices of consumer advocates in enforcement cases. With EU elections looming, the report represents a full-throated demand for trust-busting to be a keystone of the next Commission's agenda.

If you have any monopoly tips or stories you'd like to share, drop us a line at hello@antimonopoly.ca

Follow CAMP on Twitter LinkedIn Instagram or Facebook​