Letters: CAMPing at the Senate
March 24, 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.
CAMP Urges Senators to Take Concentrated Markets SeriouslyIn an appearance before the Senate Finance Committee this week to discuss Bill C-59, CAMP Executive Director Keldon Bester welcomed the proposed legislation as bringing Canada’s competition law up to speed with our international peers. But to truly tame corporate concentration in Canada, CAMP argued the law should go even further in fortifying protections against corporate consolidation and monopolistic behavior. Among the positive elements of C-59 highlighted were provisions enabling private companies to launch legal challenges against anti-competitive practices, giving companies options beyond relying solely on the Competition Bureau. With the Bureau's resources stretched thin across the nation's $2 trillion economy, CAMP made clear that this "private access" offers a valuable complementary enforcement mechanism. The bill also pushes the Competition Bureau to consider the impacts of mergers on workers alongside consumers and businesses - an important modernization as competition law begins to reckon with the intersection of competition and labour. But CAMP made clear to the committee that there was room for improvement in how Canada’s competition law treats mergers in highly concentrated markets. In doing so, CAMP advocated for presumptions against allowing further consolidation in already dominated sectors. Canada's existing laws have persistently waved through mergers culminating in near-monopolies, eroding choice and affordability for Canadians. While already making improvements, C-59 provides an opportunity to finally rectify this oversight by prioritizing market structure analysis. With structural presumptions, merging parties in concentrated industries bear a higher burden of proof that no competitive harm would occur and must work harder to show how a merger might benefit Canadians. This kind of preemptive safeguarding of open markets will be vital for protecting the interests of Canadian consumers, workers, and entrepreneurs across the economy. Fuzzy Math Can't Obscure Canada's Telecom TollAccording to Statistics Canada's data, cellphone and internet prices in Canada have been declining, contributing to lower rates of inflation. But according to internet service provider TekSavvy, these official figures misrepresent the facts on the ground for Canadians still paying some of the highest rates in the world for internet access. TekSavvy notes the agency's methodology relies heavily on promotional offers and temporary discounts from carriers, rather than accounting for the profusion of added fees that get tacked onto consumers' final tallies. This contrasts with the consistent increases in telecoms' average revenue per user (ARPU) metrics, which have held steady or risen over recent years. When summoned before the House of Commons industry committee recently, the CEOs of Rogers, Telus and Bell all claimed mobile pricing is becoming more affordable amid robust competition. However, critics argue the advertised rates masked by promotional discounts do not reflect the true costs people pay. The telecom leaders cited increased data buckets and consumers switching providers as signs of decreasing prices, but their revenue numbers tell a different story. Regulators should rely on data tracking the telecom's consistent ARPU growth rather than advertised rates. Only increased competition from independent providers can sustainably lower consumers' outrageous mobile costs in Canada. U.S. DOJ Fires Shot at Apple's Walled GardenApple's tight control over the smartphone market has led to legal action against the tech giant. The U.S. Department of Justice (DOJ), supported by several states, has accused Apple of engaging in monopolistic practices. The DOJ claims the company creates barriers that make it difficult for competitors to enter the market while forcing excessive fees on developers and consumers. From restricting innovative apps to limiting cloud gaming services, Apple is alleged to employ an array of tactics to maintain its dominance in the industry. This legal challenge is another step to address the growing concerns about the unchecked power of major technology companies. Last week in a piece for the Globe and Mail, CAMP Executive Director Keldon Bester criticized the emergence of the "bully-based economy" where a few key players dictate the rules and extract value from the ecosystem. Citing the experiences of Epic Games and Beeper, which both faced Apple’s wrath for attempting to challenge the status quo, the article highlights conduct at the center of the DOJ’s case. The lawsuit against Apple represents a significant step in an emerging global movement to rebalance power dynamics and create an environment where innovation can thrive without being hindered by the whims of monopolistic companies. If you have any monopoly tips or stories you'd like to share, drop us a line at hello@antimonopoly.ca |
CAMP Opening Statement to the Senate Standing Committee on National Finance's 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 harms caused by monopoly and building a more democratic economy. Echoing my message to this committee last year, this is an exciting time for competition policy in Canada.
While several elements of C-59 will improve competition in the Canadian economy, notably those to support the modernization of the payments system and fostering employee ownership of Canadian firms, I will focus my statement today on reforms to the Competition Act, with a fuller discussion included in the written brief submitted to this committee.
One of the most important changes to Canada's competition law in C-59 is the opening of private access to the Competition Act. In contrast to the United States where individual companies 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.
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 the conduct available to private access and allowing companies to seek damages for the harm caused by that conduct.
Another area of C-59 I would like to highlight is the important changes to the Competition Act’s treatment of mergers.
Today the Competition Act downplays the role that market structure, the number and size of players in a market, plays in competition. One way it does so is by rejecting increases in concentration as indicative of potential harm to competition. By removing language that rejects market structure as a potential indicator of competitive harm and adding increases in concentration as a factor in evaluating a merger, C-59 gives our competition law additional tools to defend against mergers in markets where Canadians already face limited choices.
C-59 also addresses a gap in Canada’s merger law that has excluded a critical component of our economy from analysis. Though we often view competition through the lens of 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.
By including effects on workers as a factor for review, C-59 is a step towards a competition law that takes a more holistic view of the costs of consolidation.
The amendments proposed in C-59 serve to catch Canada’s competition law up to those of peer jurisdictions. In the spirit of learning lessons from our international partners, this committee should consider the potential for C-59 to go further in strengthening the law’s stance against mergers in already concentrated 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 already concentrated markets, 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 and mergers in sectors exhibiting very high levels of concentration can be banned outright.
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.
Written Submission to the Senate Pre-Study of Bill C-59, the Fall Economic Statement Implementation Act
Bill C-59 marks an important strengthening of Canada’s Competition Act, the keystone of
federal legislation protecting and promoting competition across the economy. Building on
the recently passed Bill C-56, C-59 moves Canada further away from the competition law
framework that has driven consolidation and reduced choice and competition for
Canadian consumers, workers, and businesses.
In its' written submission CAMP highlights how C-59:
- Decentralizes enforcement of the Competition Act through meaningful private access;
- Emphasizes the role of market structure and effects on labour markets in mergers;
- Creates meaningful penalties for anticompetitive agreements, and
- Promotes environmental policy goals while preserving competition
To better protect competition and Canadians, CAMP recommends C-59 is amended to introduce structural presumptions against mergers in already concentrated industries and immunize the Competition Bureau against cost awards to major corporations.
Read CAMP's full written submission to the Senate Standing Committee on National Finance here.
We need to talk about Apple’s bullying behaviour with its app store
Epic’s conflict with Apple is emblematic of the monopoly problem in digital markets. Epic has effectively been at war with Apple since 2020, protesting the 30 per cent cut of revenue that Apple demands for all in-app transactions on the iOS platform. Epic argues that because it has its own app store, users should have the freedom to choose where they buy Epic’s products no matter what platform they decide to game on.
Click here to read full article.
Letters: Movie Market Power
March 17, 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.
To Save Canada’s Indie Theatres, Police Market PowerA new report from the Network of Independent Canadian Exhibitors (NICE) this week reveals the dire situation facing Canadian independent movie theatres. The financial landscape is bleak: 60% of independent theatres operated at a loss in their last fiscal year. In order to remain operational in the short term, theatres are seeking public funding to keep the doors open on these cultural landmarks. But to preserve the long-term viability of independent cinemas, the harms of market power must be addressed up the cinema supply chain. A staggering 81% of independent exhibitors are required by studios to have "clean runs" where they can only play a single movie exclusively for 2-4 weeks. This severely limits a cinema’s programming flexibility and ability to diversify its audience should a major movie prove unpopular. Additionally, 53% of cinemas say they must wait for nearby Cineplex theatres to finish playing new releases before they can book the same film. This restriction is particularly problematic because Cineplex has a clear monopoly in film exhibition, accounting for about 75% of Canada’s box office market share. These restrictions are a reflection of the power in both the film distribution and exhibition markets. Despite laws on the books against anticompetitive agreements and market allocation, these practices have been allowed to thrive in Canada’s cinema market. With stronger competition powers, conduct like this should be first in the crosshairs. It’s Loblaws’ World, We’re Just Living In ItTwo stories this week highlighted the sprawling dominance that the Loblaws corporation wields across Canada through its grocery and pharmacy empire. Loblaws has evolved far beyond just a grocery retailer into an "everything company" involved in pharmacy, healthcare, financial services, real estate and more. Its sheer size and diversification have allowed it to amass incredible market power and control over Canadian consumers' lives. This concentration is on full display with the scandal around aggressive corporate targets at its prominent pharmacy chain, Shoppers Drug Mart. Despite public denials, internal documents showed Shoppers was pressuring pharmacy owners to meet troubling quotas for billable services like medication reviews, raising ethical concerns about prioritizing revenues over the needs of patients. Owners who missed or refused to hit these targets faced punishment from corporate management who increasingly set standards for formerly independent pharmacists. Shoppers’ conduct shows the real gains from economies of scale: control. The ability to dictate these controversial practices underscores the dominance Loblaws exerts in the pharmacy sector as the country's largest drugstore chain. As more independent pharmacists become franchisees beneath national conglomerates, regulators must ensure that power is not abused at the expense of patients and taxpayers. Nobel Economist Reflects on the Costs of the Efficiency CultLeading economist Angus Deaton is having second thoughts. In a recent article by the economics Nobel winner, Deaton reflects on the shortcomings of mainstream economic thought and the damage caused by a singular focus on economic efficiency. He acknowledges that economists have historically valorized efficiency above other important societal goals like equity and social justice. By equating human well-being too narrowly with income or consumption and de-emphasizing the ethical considerations of what constitutes a good life, economists have been blinded to the harms of their policy prescriptions. Deaton admits to previously subscribing to the idea that any harm to American workers from union busting and free trade was an acceptable price for boosting economic efficiency and reducing global poverty. However, he now questions whether those assumed trade-offs were ethical or empirically sound. A previous proponent of unfettered globalization, Deaton now expresses skepticism that the benefits of globalization were worth the costs imposed on domestic workers. Deaton advocates for economists to re-engage with the ideas from philosophers, historians and sociologists to develop a richer, more nuanced understanding of human welfare beyond just income and consumption metrics. Rather than dogmatically pursuing efficiency above all else, Deaton calls for recognizing competing perspectives and giving fuller consideration to other vital goals like equality, justice and social cohesion. If you have any monopoly tips or stories you'd like to share, drop us a line at hello@antimonopoly.ca |
Loblaw Has Become an Everything Company
According to Keldon Bester, executive director of the Canadian Anti-Monopoly Project, “there is in our competition institutions, and reflected in parts of government, a ‘first do no harm’ kind of approach.” That attitude is complemented by so-called “regulatory humility,” he adds, which means the state plays the role of an uncertain broker, unwilling to assume the worst of companies. He says this approach misses the “one-way nature of these things,” and so it becomes less likely that we can reverse their concentration and entrenchment.