May 5, 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:

• University of Saskatchewan researchers find a much higher price tag for Bunge-Viterra
• Poilievre calls out big business lobbyists for ignoring everyday Canadians
• Closing arguments heard in U.S. Google search monopolization case

Let's dive in.

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Grain Drain: Researchers Find Bunge-Viterra Could Cost Canadian Farmers $700 million

Last week we covered the Competition Bureau’s opposition to the Bunge-Viterra takeover, where the Bureau estimated that the transaction could cost Canadian farmers $20 million annually. This week, a comprehensive report from professors at the University of Saskatchewan provides analysis that paints a much starker picture of the potential financial implications for farmers.

The report estimates that the merger could cost grain farmers over $700 million annually, an order of magnitude higher than the Bureau’s estimates. The study also highlights the potential impact on individual farmers, suggesting that Western Canadian wheat growers could see their annual income drop by thousands due to higher margins extracted by the merged agricultural giant. Similarly, a canola farmer in Saskatchewan might lose tens of thousands of dollars annually as higher costs are compounded by the risk that plans for a new local processing facility are scrapped.

This transfer of wealth from farmers to the merged agricultural giant would make it harder for those farmers to invest in their operations, support their families, and contribute to their local economies. The report finds that a merged Bunge-Viterra would handle over 40% of Western Canada's grain, leading to market power imbalances and reduced bargaining power for farmers.

As regulators continue to scrutinize the proposed merger, the report provides a data-driven foundation for assessing the potential consequences for individual farmers and the agricultural industry as a whole.

Poilievre Says Ottawa Bubble Must Win Over Main Street

Conservative party leader Pierre Poilievre penned an op-ed this week urging corporate Canada to stop relying on lobbyists and instead focus on winning public support for their policy proposals. Poilievre’s call comes as domestic big business lobby groups argue that Canadian policy makers should abandon efforts to bring home meaningful competition law reform despite clear support for a harder line against monopolies amid the rising cost of living.

The message is particularly well-timed as the effort to quash Canada’s competition revival becomes increasingly international. This week the Information Technology and Innovation Foundation (ITIF), an American think tank funded by some of the largest corporations on the planet, launched its Center for Canadian Innovation and Competitiveness. ITIF has been a staunch opponent of ramped up antitrust enforcement in the U.S. and has attempted to push back on recent Canadian efforts to strengthen our weak competition laws.

To truly benefit workers, consumers, and entrepreneurs, Canada needs a policy agenda that addresses the growing concentrations of economic power stifling the dynamism of our economy. This means promoting fair competition, reducing barriers to entry, and ensuring that public policy is guided by the interest of the public, not dominant players.

Poilievre's call for businesses to engage directly with the public is a step in the right direction, but it must be accompanied by a commitment to fostering a more dynamic and competitive economy. Only this kind of economy can ensure that its benefits are shared widely and that every Canadian has the opportunity to succeed that they deserve.

Judge Hears Closing Arguments in Google Search Case

The U.S. Department of Justice (DOJ) and Google's legal team faced off in a final showdown this week, presenting starkly different narratives in the closing arguments of the antitrust case targeting the tech giant's dominance in the market for online search.

The DOJ, which filed the case back in 2020, argues that Google illegally abused its monopoly power to maintain its grip on the market and stifle competition. With an 89% market share in general search as of 2020, the government contends that Google has preserved its dominance through exclusive distribution agreements with device makers, carriers, and Apple, relying on the "power of defaults" to keep users locked into its ecosystem. The DOJ claims these practices have deprived rivals of the scale necessary to compete effectively, reduced Google's incentive to innovate, and ultimately resulted in slower, less accurate search results and higher advertising prices for users.

Google, unsurprisingly, painted a very different picture in its closing arguments. The company maintains that it faces robust competition from a wide array of online rivals beyond just traditional search engines, that any barriers to entry are insignificant, and that its agreements and conduct are justified by legitimate business reasons that benefit consumers.

The outcome of this case will have far-reaching implications not just for Google, but for the future of competition in the digital economy. For advocates of fair and competitive marketplaces, the stakes couldn't be higher as we await Judge Mehta's decision in the coming months.

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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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

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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

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