CAMP Opening Statement to the House Standing Committee on Finance (FINA) on the Study of Bill C-59
Thank you to the committee for inviting me to speak today on this important piece of legislation.
My name is Keldon Bester and I’m the Executive Director of CAMP, a think tank dedicated to addressing the harm caused by monopoly and building a more democratic economy. We appreciate the opportunity to return to this committee to discuss improvements to Canada’s competition law contained in C-59.
Of the changes to the Competition Act included in C-59, I want to focus my opening statement on two areas – the opening of the Act to private access and its improvements to the merger enforcement framework.
Today, in contrast to the United States where individual companies can bring cases against corporations harming competition, in Canada nearly all competition law cases originate from the Competition Bureau. Despite its best efforts, the Competition Bureau has finite resources and cannot have eyes on every corner of Canada’s $2 trillion economy. A more decentralized competition law framework is more likely to address harms to competition, especially those affecting small and medium-sized businesses.
Accordingly, a robust private access framework is an important complement to the expert work of the Competition Bureau and C-59 creates the foundation for this by expanding private access to the Competition Act and allowing companies to seek damages for the harm caused by that anticompetitive conduct.
Shifting to merger enforcement, today the Competition Act downplays the role that market structure, the number and size of players in a market, plays in competition. By removing language that rejects market structure as an indicator of competitive harm and adding increases in concentration as a factor in evaluating a merger, C-59 gives our competition law a better defense against mergers in markets where Canadians already face limited choices.
C-59 also addresses a gap in Canada’s law that excludes a core component of our economy from analysis of mergers. Though we often talk about the benefits of competition to consumers, Canadians benefit from a more competitive economy not just as consumers, but as entrepreneurs and workers as well. While competition law has long considered the cost of consolidation on consumers and businesses it has been largely silent on the potential effects on workers.
Thankfully this is changing. It is changing at home with the recent inclusion of wage-fixing and no-poach agreements under Canada’s competition law and it's changing abroad with the inclusion of effects on workers in the U.S. Federal Trade Commission’s recent complaint against the proposed Kroger-Albertson's grocery merger.
C-59 is another positive step in this direction. By including effects on workers as a factor for merger review, C-59 gives our competition law a more complete view of the costs of consolidation to Canadians.
In addition to these changes, this committee should consider the ways in which C-59 could go further to protect Canadians who already face limited choice in important markets.
When a market is highly concentrated, further consolidation is more likely to harm competition at the cost of Canadian consumers, workers and entrepreneurs. Recognizing this, a bias against mergers in markets with few players, often referred to as a structural presumption, should be incorporated into Canada’s competition law. With structural presumptions, merging parties must work harder to prove a merger in an already concentrated market will benefit Canadians. These presumptions can intensify as a market becomes more concentrated, banning them outright where a single firm dominates a market.
As others have pointed out, Canada’s current competition law has repeatedly allowed mergers to near- or literal monopoly, killing competition and choice for Canadians. This is a consequence of competition law that does not take market structure seriously, a trend that C-59 provides an opportunity to break with.
C-59 is an important component of comprehensive reform to the law that Canadians depend on to protect competition and affordability in all sectors of the economy, and this committee has the chance to strengthen these reforms to truly protect competition and Canadians.
Thank you for your time today and I look forward to your questions.
Letters: Banking on Monopoly
April 7, 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.
A Blueprint for More Banking CompetitionCanada's banking sector desperately needs more competition to benefit consumers. The current cozy marketplace allows big banks to raise profits through higher fees and less generous interest rates rather than innovating. On the fee side of the house, Canadians pay some of the world's highest banking fees at $694 per household annually. That’s a high price to just to keep our hard-earned savings safe. A major roadblock is Canada's outdated financial infrastructure and regulations that protect incumbent advantages in the name of stability. Simple processes like account transfers still require manual faxes and mail, deterring customers from switching institutions. Unlike other G7 nations, Canadian payments don't settle in real-time, allowing banks to collect interest during delays. Regulatory uncertainty from split federal and provincial overseers, none of which include a mandate for competition, means no single body is empowered or accountable to make anti-monopoly reforms. To turn the tide on competition in the banking space, CAMP and Fintechs Canada collaborated on a blueprint for a more competitive banking market. Pushing back on the idea that competition and stability must be traded off, the report recommends giving Canada’s banking regulators a mandate to promote competition, make it easier for new entrants to enter the banking and payments space, and tighten controls on mergers to avoid another RBC-HSBC Canada. Delivering a truly competitive banking system requires balancing prudential oversight with a commitment to greater competition, and we believe Canada’s regulators are up to the task. But the process will not be easy, as Canada’s banks have a vested interest in protecting the world-leading profits they generate each quarter. Only sustained political will can overcome gatekeeper resistance to open up Canada's ossified banking sector. Google Punishes Indie Publishers“We shouldn’t live in a world where only a few major companies dominate the entire search online ecosystem; Google needs to become a fairer search engine without bias,” wrote Retro Dodo founder Brandon Saltalamacchia in a post this week outlining how small independent publishers with original, human-written editorial content are being punished by Google and pushed down its all-important traffic-driving page ranking algorithm. The post is another desperate plea to Google from outlets which struggle to divine the vague and often contradictory instructions to win the favour of Google’s algorithm and gain access to the eyeballs that keep them in business. With the quick adoption of AI-powered summaries in search results and now AI-generated content indexed in Google’s previously robust book queries, indie publishers are facing an uphill battle to stay in front of audiences on the venerable web crawling platform. The challenges faced by independent publishers like Retro Dodo are not unique to their website. Many small content creators and publishers are struggling to maintain their visibility on Google's search results pages. The dominance of major companies in the search ecosystem has created an uneven playing field, where smaller websites are at a significant disadvantage. This lack of diversity in search results is leading to a less vibrant and less informative online experience for users, who miss out on valuable content from independent sources. The responsibility for a more vibrant landscape falls on regulators, competitors and individual internet users. Regulators need to implement policies that encourage competition and address abuses of dominant market positions that allow corporations to erect moats around the free and open internet. At the same time, competitors like DuckDuckGo, Bing, or Ecosia need to offer alternatives that reward indie publishers and quality human-generated content. With these alternatives available and monopolistic practices kept in check, users will be free to migrate and reward the efforts of search engines with higher quality information. Through a concerted effort from all stakeholders, we can ensure that the internet remains truly free and open, where independent publishers like Retro Dodo have a fair chance to reach their audience and contribute to the wealth of information available on the web. Censorious Apple Tried to Keep Down KhanOn an episode of The Daily Show last week, host Jon Stewart welcomed Lina Khan, the chair of the Federal Trade Commission (FTC), as a guest. Khan, known for her tough stance against corporate monopolies and her efforts to promote fair competition, discussed the FTC's ongoing work to address anticompetitive practices in the tech industry and other sectors. During the interview, Stewart made a surprising revelation about his former show, The Problem with Jon Stewart, which aired on Apple TV+. He disclosed that Apple had previously asked him not to invite Khan as a guest on his show. "They literally said, 'Please don't talk to her,” Stewart shared with the audience. This revelation highlighted the influence that large tech companies like Apple can and do wield over the free flow of information even in the internet age. Throughout the interview, Khan emphasized the crucial role of the FTC in preventing the concentration of power and decision-making in the hands of a few dominant companies. She stressed the importance of maintaining a fair marketplace for businesses and protecting consumers from the potential harms that can arise from corporate monopolies. Though Apple’s censorship highlights the dangers of concentrated media markets, the interview also revealed how brittle these censorship efforts can be when individuals are willing to speak out against them. The Agenda Goes to CAMPThis week, CAMP Executive Director Keldon Bester appeared on TVO’s The Agenda to discuss the growing problem of greenwashing. Referring to the deceptive practice of representing a product or service as environmentally friendly, greenwashing is a growing problem as more consumers take their impact on the environment seriously. The show’s panel explored why companies greenwash, the challenges of regulating the practice, and potential solutions to the growing issue. As environmental impact becomes more important to consumers, some companies prioritize appearing sustainable over actually implementing sustainable practices. This deceptive behavior makes it difficult for consumers to make informed choices in a marketplace where information to back up sustainability claims is not available. Panel members acknowledged the challenges of addressing greenwashing, including challenges to claims about entire businesses or brands rather than specific products. But the show explored potential solutions, including proposed amendments to the Competition Act that would specifically target greenwashing. While some experts believe that this is a positive step, others argued that more comprehensive measures are needed to effectively combat greenwashing. If you have any monopoly tips or stories you'd like to share, drop us a line at hello@antimonopoly.ca |
Fintechs Canada, CAMP draw up blueprint to make banking more competitive
Fintechs Canada
Fintechs Canada and CAMP note that other jurisdictions, such as the United Kingdom, Australia, and the United States, better empower their regulators to promote competition in the financial sector.
CAMP, Fintechs Canada draw up blueprint for a more competitive banking sector
To strengthen competition in Canada's financial sector, the federal government must implement consumer-driven banking and then think bigger, according to a report by Fintechs Canada and the Canadian Anti-Monopoly Project (CAMP). The two organizations recently collaborated to produce a joint submission to the Department of Finance's consultation on strengthening competition in the financial sector.
"False is the idea that there is always a trade-off between financial sector stability and competition... The major reason that financial crises have not materialized in Canada is Canada’s approach to supervising financial institutions, not deliberate choices by the government to suppress competition."
Covering a wide range of policy tools, the report recommends
- Giving financial sector regulators mandates to promote competition
- Creating a college of regulators to improve regulatory coordination and harmonization
- Modernizing Canada's approach to granting bank licenses
- Expanding access to and promoting fair and level pricing of critical payments infrastructure
- Completing the implementation of consumer-driven banking
- Strengthening merger control in the banking sector, and
- Regularly reviewing the state of competition in the financial sector
"We believe Canada needs a long-range, comprehensive policy agenda— constituting a whole-of-government approach—to promoting competition in the financial sector without compromising its stability," the report concludes.
CAMP is a think tank dedicated to addressing the issues caused by monopoly power in Canada. CAMP produces research and advocates for policy proposals to make Canada’s economy more fair, free, and democratic.
Fintechs Canada is an industry association of Canada's most innovative financial technology companies. Collectively serving millions of Canadians on a daily basis, the association's membership includes Canada's fintech market leaders, global fintech companies, fintech-friendly financial institutions, and the technology companies that power the credit union space, among others.
Click here to read the full report.
Letters: Monopoly as Wealth Transfer
March 31, 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.
Globe: Let Investors Have Their MonopoliesConfirming why we get up to work every morning at CAMP, a Globe and Mail review of Canada's best oligopolies for investors gets to the heart of the lack of competition in various Canadian sectors. The article celebrates how a handful of large, dominant firms in sectors like banking, railways, telecoms and groceries have delivered outsized returns for investors over the past decade by facing little competitive pressure. The article paints these cozy oligopoly environments as a positive for investors, allowing the entrenched players to keep profits high. The piece highlights how the Big Six banks outperformed the overall Canadian stock market by 48 percentage points over 10 years with their concentrated control of the domestic mortgage and deposit markets. Meanwhile, the two railway giants CP and CN racked up over 240% total returns by facing virtually no new competitors. Finally, it calls out the fat profit margins enjoyed by the three major telecoms and handful of large grocery chains thanks to their dominant market positions. The lack of competition is framed as an investor's dream - enabling consistent returns, attractive dividends, and the ability to raise prices with little fear of losing customers. Limited options are portrayed as an inconvenient grumble for consumers, but a great money-maker for those holding the oligopolists' shares. The piece perfectly captures the fact that monopolies are essentially a wealth transfer system: equity holders that skew older and richer reap the rewards while everyday consumers and workers get stuck with the bill. With billion-dollar profits on offer, it's little wonder more emphasis isn't placed on opening up these concentrated industries to greater rivalry that could benefit the public. The analysis shows that competition advocates have our work cut out for us. The CRTC and the Future of Internet Competition in CanadaCompetition in the internet market is back in the hot seat at the CRTC, Canada’s telecommunications and broadcasting regulator, with a week-long hearing on “wholesale internet access” completed in early February. This week, telecom analyst Bryson Masse summed up the stakes and the latest developments on that file for CAMP. On the docket was the question of whether the incumbent operators of the Fibre-to-the-Premises (FTTP, or more often simply ‘fibre”) networks need to allow smaller players to connect and offer competitive internet services over the latest internet technologies. The hearing was a culmination of years of regulatory battles between large telecom incumbents like Bell, Rogers, and Telus, and smaller independent internet service providers (ISPs) like TekSavvy and Execulink. The crux of the debate is whether the wholesale access regime should be updated to make it easier for smaller companies to purchase access to incumbent fibre infrastructure, promoting competition, innovation, and consumer choice in the market for advanced internet services. Throughout the hearing, incumbents argued against mandated wholesale access, citing concerns over reduced investment and the purportedly competitive nature of Canada's telecom sector. Bell advocated for speed caps and restrictions on indie ISPs accessing its wholesale networks, particularly within five years of new fibre investments. Telus maintained that it should not be considered an incumbent in Ontario and Quebec, seeking access exclusions in its traditional operating areas. On the other hand, consumer groups, indie ISPs, and some regional players pushed for broad access mandates and improved customer quality-of-service metrics. TekSavvy highlighted the tenuous state of telecom competitors in Canada, while Cogeco asserted that 50% of their wholesale customers were associated with Bell, Rogers, or Telus due to "takeovers" of independent ISPs, posing an existential threat to regional carriers. With internet competition in Canada headed in the wrong direction, the CRTC has the chance to reverse this decline and make next generation internet more affordable for all Canadians. Pharmacists Push Back Against Corporate Profit AddictionOntario's pharmacy regulator is gearing up for a legal battle against corporate giants after receiving a deluge of whistleblower accounts from pharmacy workers. Thousands of employees have blown the lid off alleged unscrupulous business practices prioritizing profits over patient care and ethical conduct, according to a report from the Ontario College of Pharmacists. The shocking revelations highlight how major pharmacy chains strong-arm staff to perform unnecessary billable services like medication reviews solely to inflate revenues. Workers reported feeling intense pressure from corporate brass to meet arbitrary targets, even when such services provided no medical benefit to customers. Those who refused to toe the line say they faced reprisals or threats of termination. Beyond just medication reviews, employees disclosed being pushed to rush other patient consultations and cut corners on key responsibilities like dispensing life-saving naloxone. The disturbing patterns point to a corporate culture that systematically undermines the professional judgment of pharmacists and technicians in favor of relentless revenue extraction. Though legal action is a welcome development, corporate control over independent practitioners with a duty to patients is the root of the issue and should be addressed directly. The monopolization of Canada’s pharmacy has occurred under the watch of regulators and now they face the difficult task of turning back the clock and giving power back to pharmacists. If you have any monopoly tips or stories you'd like to share, drop us a line at hello@antimonopoly.ca |
Setting the Future of Internet Competition in Canada
Bryson Masse is a writer and analyst with a focus on Canada's telecommunications market
Canada’s telecommunications regulator, the Canadian Radio-television and Telecommunication Commission (CRTC), has made it through another in-person hearing about the wholesale access framework for wireline telecommunications in Canada. What does that mean in English? It means there’s an opportunity for more competition, innovation, and consumer choice in the market for the most advanced internet services available in Canada.
Last month, the CRTC hosted a week-long examination of the ways more competition would improve consumer outcomes in the Canadian telecommunications sector. The three-Commissioner panel heard from the Competition Bureau, consumer groups, independent internet service providers (ISPs) like TekSavvy and Execulink, the national telecommunications incumbents of Bell, Rogers and Telus as well as the smaller regional incumbents like Cogeco and Videotron.
The item up for debate, with the Bureau, consumers, indie ISPs and some regional players on one side and other regional and the large national players on the other: whether the wholesale access regime should be updated to make it easier for smaller companies to purchase access to incumbent fibre-to-the-premises (FTTP or just simply ‘fibre’) infrastructure.
The history of the internet is hidden in the walls of the buildings around us. Some connections to the internet still use copper phone lines, others use the coaxial cable lines from the days of cable television, but the latest generation of connectivity uses fibre-optic cables to transmit data at high speeds with very reliable service. But these connections differ not only in their construction but also the regulations that apply to them.
Until now, cable and telephone lines built by the giant incumbent operators need to be shared with indie ISPs through mandated wholesale pricing determined by the CRTC. As it stands today, fibre lines also need to be shared. But the rules established in 2015 ended up being too unwieldy for the industry to navigate with no companies employing the wholesale access model to sell fibre-based services. This hearing sought to update these terms.
Fair wholesale access to incumbent last mile and transport networks is critical to maintain competition in Canada’s oligopolistic telecom sector. It’s not the first time the federal telecom regulator has been down this path, but this round had a different tone from the previous runs at this type of regulation.
If the CRTC continues its current trajectory, a functional wholesale access service will be extended to the fibre networks built by the large telephone and cable companies. This will enable a new generation of service offering that compete through improved customer experience and more affordable prices.
This article provides a guide to what wholesale internet regulations do, how they’ve worked in the past and what they might mean for the future of internet competition in Canada.
Telecom Regulation Recognizes Reality
In a sentence, wholesale internet access frameworks mandate a price ceiling on the fees that large telecommunication companies can charge to other ISPs for access to the wires, lines and radio towers that connect to end users. When other ISPs can offer their distinct network services (not just internet, but also telephony, television and other data transmission offerings) based on that wholesale access, consumers benefit from choice and what’s known as service-based competition.
These wholesale-based indie ISPs, instead of relying on facilities-based competition that requires building an entirely new network , compete on better customer support, innovative services and perhaps most foundationally, better prices. Facilities-based competitors also claim to compete on these terms, but when the cost of admission is in the billions of dollars, consumers can be left waiting a long time for the benefits to appear.
Internet access regulations stem from the basic fact that it’s expensive and inefficient to build multiple, overlapping network infrastructures. Much like water pipes, electricity lines and highways, telecommunication networks tend towards being natural monopolies and underlying infrastructure sharing is a way to maximize economic efficiency. This is particularly the case for Canadians living in small and remote communities, where multiple providers are less likely to build than their urban counterparts.
Wholesale Rollercoaster
The last 15 years of wireline telecom regulation in Canada have been a wild regulatory ride. The public fights over the wholesale access framework kicked off when smaller internet companies sought to access the incumbent infrastructure in the first place.
Since the early 2010s, the incumbents, indie ISPs and the CRTC have been in a dance over the details of the regulatory framework governing the sharing of wireline networks. Originally in 2011, the fight was over whether the CRTC should design a system which enabled unlimited home internet plans. At this time, internet offerings in Canada were often capped with a monthly download limit and overage charges would be incurred after users exceeded that limit. At the end of these early deliberations, the CRTC picked a pricing structure that would allow for the smaller companies to avoid implementing such caps.
This allowed the indie ISPs a keen market differentiator for their services that provided consumers an enormous benefit. Eventually, the indies and the Canadian consumer came out on top and innovative services from indie ISPs changed the Canadian home internet market forever.
Following that, the debate moved to what types of technology indie ISPs should have access to. In 2015, sharing was mandated over the then-next-gen fibre networks, but the arrangement was a departure from the “aggregated regime” which originally allowed for unlimited home internet plans. This “disaggregated” system would have hypothetically lowered the ongoing costs for indie ISPs, but instead introduced massive barriers to implementing the new wholesale services. Think about having to buy all the parts of a car individually rather than in one go and you’ll have an idea of the complexity. Disaggregated fibre wholesale access remained unused until it was effectively scrapped in early 2023.
Is the Price Right?
Throughout this process the question of whether the prices for wholesale access for indie ISPs are fair has long been a challenge to the CRTC.
On the pricing of the access to the former telephone and cable networks, after years of analysis the CRTC issued a decision in 2019 which substantially reduced the rates paid by access seekers. So much so that the incumbent telecoms owed hundreds of millions in retroactive overpayments. This decision was met with jubilation from the competitive ISPs and the public, but white hot corporate rage from the incumbents.
In response, incumbents filed appeals at the CRTC, the courts and even the federal Cabinet. Despite their extensive efforts, the Supreme Court of Canada refused to hear the incumbents’ arguments after they lost in the Federal Court of Appeal and Cabinet, which had expressed concerns about the lower rates, decided not to intervene and modify the CRTC's decision.
Unfortunately for consumers, the CRTC overruled its own previous decision and maintained the wholesale rates at prices established in 2016, ending the requirement for the giant incumbents to pay back hundreds of millions in overpayments to the indie ISPs. While it claimed to have found errors in its own calculations, the CRTC promised a fuller review of wholesale services overall to determine what would be considered “just and reasonable” wholesale rates.
Will 2024 Mark a New Dawn in Internet Competition?
To finally reach those “just and reasonable” rates the CRTC launched a comprehensive hearing in early 2023, throwing out the unused disaggregated fibre model and heading back to the drawing board on aggregated fibre access.
The question again remained who should get access and at what price. In early 2023 the CRTC asked for views on interim access to fibre assets, and in a November 2023 decision, the CRTC issued a preliminary order to have Bell and Telus provide that aggregated access to their fibre networks in Ontario and Quebec within six months— sparing Telus’ larger footprint in the west of the country. Since then, Bell has tried to appeal the November decision to the federal cabinet and the Federal Court of Appeal. While the court agreed to hear the case, it was not convinced of Bell’s argument to pause the six-month timelines during its appeal and as it stands, Bell will need to launch wholesale fibre services by May 7, 2024.
But to determine the future of Canada’s approach to internet competition, the CRTC continued with its public hearing in February 2024. By creating a public record, these hearings provide an important layer of transparency to an otherwise opaque and technocratic process. While much of the process remains shrouded by redacted submissions and in-house calculation, the CRTC’s hearings remain an important lever of public accountability.
The CRTC heard from witnesses from consumer groups, indie ISPs as well as the big incumbents. The big incumbents pushed back with the usual claims of reduced investment and the wildly competitive telecom sector in Canada, but it was not with the usual vigour (or as many threats to cut jobs). More attention was focused on ensuring competitive options would not get drowned out by a large incumbent choosing to leverage wholesale access.
During the course of the hearing, Bell advocated for speed caps and restrictions on indie ISPs accessing its wholesale networks, particularly within five years of new fibre investments. Unsurprisingly, Bell threatened to reduce fibre network investments in areas deemed commercially unviable if regulatory conditions were unfavorable. Robert Malcolmson, Bell's chief legal and regulatory officer, stated that they were ready to shift to reselling cable and Telus fibre if necessary.
Telus maintained that it should not be considered an incumbent in Ontario and Quebec, the focus of the CRTC's interim decision. Brittany Larsen, Telus' director of regulatory affairs, proposed that wholesale mandates should not apply to network owners in their incumbent territories. Telus sought access exclusions only within its traditional operating areas of Alberta, British Columbia, and parts of Eastern Quebec. However, Rogers' senior vice president, Dean Shaikh, countered that Telus' proposal was hypocritical and self-serving, dismissing the notion that Telus was a plucky regional carrier providing competition.
Cogeco and TekSavvy pushed back against incumbent influence, with Cogeco's president, Frédéric Perron, asserting that 50% of their wholesale customers were associated with Bell, Rogers, or Telus due to "takeovers" of independent ISPs, posing an existential threat to regional carriers. TekSavvy's Andy Kaplan-Myrth highlighted the tenuous state of telecom competitors in Canada, with their subscriber count declining since its peak, emphasizing that no rational business runs on hope forever.
The Competitive Network Operators of Canada supported aggregated access mandates and called for improved customer quality-of-service metrics to track differences in response times between first-party and third-party providers. Meaning that the other services that incumbents provide to indie ISP customers should be at the same level of their own first party customers.
It appears much more likely that a workable framework will emerge for the latest internet wireline technology, though there are concerns over the price-setting methodology. Quebecor-owned telecom companies Videotron and Vmedia have accused Bell of pricing its retail services beneath the wholesale services. Either indicating that the wholesale prices remain above associated costs, or that Bell is employing below-cost retail pricing to drive competition out of the market.
The success of these efforts remains a wait-and-see, but there are encouraging signs that the new CRTC chair, and former Competition Bureau and ISED bureaucrat, Vicky Eatrides understands the stakes that internet users in Canada face when it comes to competition.