Letters: Fighting Unfair Competition
June 2, 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.
Putting a Lid on Unfair Competition in GroceryLast week we talked about the importance of the Competition Bureau’s investigation into the use of property controls by Loblaws and Sobeys in showing Canadians that the bureau’s new powers were being put to use to the benefit of Canadians. But in addition to that, the investigation is also a crucial step in defining what we consider fair and unfair competition in the Canadian economy. Appearing on the Big Story podcast, Jennifer Quaid, associate professor at the University of Ottawa's Faculty of Law, explained how the property controls imposed by Loblaws and Sobeys can be used by the dominant grocers to impede competition and maintain their market power. In the world of competition, conduct interfering with the competitive process is often referred to as anticompetitive. But while the practice of property controls may harm consumers, workers, and other businesses, isn’t keeping your rivals out of prime real estate fiercely competitive behaviour? The Loblaws-Sobeys investigation highlights the importance of distinguishing between beneficial and harmful, fair and unfair competition. Fair competition is based on offering improvements to the market - lower prices, higher quality, and innovative products - in contrast to unfair competition which is based on simply exercising market power to the benefit of only incumbents. Given the current prevalence of oligopolies in Canada’s economy, defining and enforcing fair competition standards is particularly crucial to ensure these giants are unable to quash beneficial competition. The Loblaws-Sobeys investigation is an opportunity to spark a broader conversation about what constitutes fair and unfair competition. By drawing clear lines between acceptable and unacceptable practices, we can foster markets that better serve the interests of all Canadians. Canadian Law Firms Prepare for New Merger RealityCanada’s merger laws are about to get tough, and Bay Street is taking notice. This week, Stikeman Elliott LLP, a leading Canadian business law firm, released a new tool called the "Concentration Calculator" in response to proposed amendments to Canada's competition laws. The tool is designed to help businesses quickly assess whether their proposed mergers might exceed the new structural presumption thresholds and trigger a more rigorous review by the Competition Bureau. If the proposed amendments in Bill C-59 are passed, transactions that exceed certain market share or concentration thresholds will be presumed to be anti-competitive, shifting the burden of proof onto the merging parties to demonstrate that the deal will not harm competition. The changes represent an important step towards merger enforcement that recognizes the harms of mergers and halts the further concentration of Canada’s rolled up economy. But the calculator is more than just a glorified spreadsheet. It’s a sign that Bay Street is starting to take Canada’s competition reforms seriously. As the proposed amendments move closer to becoming law, we're seeing a shift in mindset among corporate Canada. Rather than buying up your competitors, actually competing for customers and market share must be the order of the day. Y Combinator Takes Fight for “Little Tech” to Capitol HillY Combinator CEO Garry Tan has set his sights on Washington, aiming to create a lobbying force for the interests of "Little Tech," the countless startups vying to unseat digital giants in burgeoning markets like AI. During a whirlwind two-day trip to the nation's capital, Tan met with key lawmakers and White House officials, and rallied startup founders to join his cause. With the help of Luther Lowe, Y Combinator's head of public policy and a veteran of the anti-monopoly movement, Tan hopes to unite venture capitalists and progressive tech advocates to challenge the entrenched interests of Big Tech in Washington. Canadian startups should take note of Tan's efforts. While the regulatory landscape may differ north of the border, the stakes are just as high. By engaging with policymakers and advocating for fair competition, Canadian entrepreneurs can help break with our monopoly past and build the foundation of a diverse and vibrant economy. If you have any monopoly tips or stories you'd like to share, drop us a line at hello@antimonopoly.ca |
Letters: Bureau Goes After Grocery Giants
May 26, 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.
Bagging the Big Guys: Loblaws and Sobeys in Competition CrosshairsCanada's Competition Bureau has launched investigations into the parent companies of grocery chains Loblaws and Sobeys for alleged anticompetitive practices, putting to work the new powers given to the bureau last year. Federal Court documents reveal that the probes focus on the companies' use of property controls to hinder competition in the retail grocery sector by preventing the entry and expansion of competing retailers. The Commissioner of Competition argues that these property controls limit the activities of potential tenants and competitors, effectively stifling competition in the grocery market. While Loblaws' parent company, George Weston Ltd., is cooperating with the review, Sobeys' owner, Empire Co. Ltd., is contesting the inquiry, labeling it "unlawful" and driven by political pressure. The bureau's investigation scrutinizes two types of property controls used by the grocery retailers across Canada: restrictive covenants that limit land use even after ownership changes and exclusivity clauses in commercial leases that dictate who landowners can lease to and what products can be sold near another leaseholder's business. In a press release marking the confirmation of the investigation, CAMP Executive Director Keldon Bester said that “after years of bearing the brunt of the rising cost of living, Canadians deserve to see the new powers they gave the Bureau put to work.” Bureau's Airline Probe Experiences Government TurbulenceAs previously covered by CAMP, the Competition Bureau is currently engaged in a market study of Canada’s airline sector, making use of new powers granted to the enforcer last year. While the move to grant the powers was an important step by the government to strengthen Canada’s competition law, messaging from the government, including a letter from Industry Minister François-Philippe Champagne, show a hesitance for the bureau to dive deep into the issues affecting the industry. Champagne’s letter emphasizes the government's awareness of competition issues and legislative efforts to empower the bureau, but emphasizes procedural guardrails and seeks to limit the scope of the study, suggesting questions of airport governance be excluded. The bureau’s study has the potential to uncover serious competition issues such as predatory pricing, but the government’s response seems to be an initial shot across the bow that it expects the bureau to stay in its lane. As the study progresses, it is crucial for the Competition Bureau to maintain its independence, and ensure that its findings lead to meaningful reforms. Only then can the objectives of lower prices and improved services for Canadian air passengers be realized. Curtain Call on Live Nation's Entertainment MonopolyThe U.S. Department of Justice has filed a civil antitrust lawsuit against Ticketmaster and its parent company Live Nation Entertainment this week, accusing the company of abusing its dominant market position at the cost of concertgoers and artists. This legal action comes after years of complaints from fans, artists, and venues about Ticketmaster's practices, including high fees and aggressive tactics to maintain its market share. According to the lawsuit, Ticketmaster has engaged in a variety of anticompetitive practices, such as forcing venues to use its services exclusively, retaliating against venues that use competing ticketing services, and using its control over major artists to pressure venues into long-term contracts. These actions have made it difficult for competitors to enter the market and have led to higher prices and lower quality service for consumers. The Justice Department's action could lead to major changes in the industry, including the breakup of Ticketmaster and Live Nation, which merged in 2010 despite concerns about the impact on competition. Surprising few, rather than hurting competition, Ticketmaster and Live Nation argue that their business practices are not only lawful, but have been beneficial to the entertainment industry. Tell it to the judge. If you have any monopoly tips or stories you'd like to share, drop us a line at hello@antimonopoly.ca |
Competition Bureau Puts New Tools to Work to Spur Competition in Grocery Sector
May 24, 2024 - Reporting this week confirms that the Competition Bureau is investigating grocery giants Loblaws and Sobeys for their efforts to restrict competition in Canada's grocery sector. Restrictive covenants, terms baked into property lease agreements, limit the ability of tenants to operate businesses in those same properties. As shown by reporting last year by the Halifax Examiner, these covenants have been used to prevent existing retailers from entering and competing in the grocery sector to the detriment of Canadians.
Grocers make use of these covenants in their dual role as landlords, with controlling interests in major real estate investment trusts (REITs). By controlling how property can be used in major markets, grocery retailers can fence off prime real estate and ensure that competing grocery stores are unable to open despite growing demand. By investigating the impact of these arrangements, the Bureau is putting to the work the new enforcement tools given to them by the cross-party supported Bill C-56, which allowed the Bureau to pursue abuses of dominance with the intent to reduce competition in a market.
"After years of bearing the brunt of the rising cost of living, Canadians deserve to see the new powers they gave the Bureau put to work," said Keldon Bester, Executive Director of the Canadian Anti-Monopoly Project. "By breaking down the barriers to competition put up by incumbents we create the opportunity for a more competitive and affordable future."
Letters: Is Loblaws Up to Code?
May 19, 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.
Loblaw Agrees to Grocery Code, but Competition Issues RemainAmid 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 BalsillieThe 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 WatchdogThis 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. If you have any monopoly tips or stories you'd like to share, drop us a line at hello@antimonopoly.ca |
Why Canada needs to invest in competition with Keldon Bester
Fintechs Canada
Alex Vronces explores competition in Canada with Keldon Bester, Executive Director of the Canadian Anti-Monopoly Project (CAMP).
Letters: Eyes on the Skies
May 12, 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.
Competition Bureau Looks to the Skies in New Market StudyFresh 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 CredibilityLast 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 |