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
The Walrus
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.
Competition bureau commissioner seeks more power to take on greenwashing
National Observer
Bester said it’s notable for two reasons. Firstly, it implies the bureau believes there’s merit to the complaints against RBC and Pathways Alliance. The second is that by getting the feds to amend the act to apply deceptive marketing provisions to more general statements rather than just products or services, the bureau is likely attempting to pre-empt the tribunal narrowly interpreting the rules.
Letters: Status Quo Says More Monopolies
March 10, 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.
Canadian Competition Community Raises The Alarm:
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Letters: Google Under Investigation, Still
Competition Bureau Expands Google InvestigationIn 2021 the Competition Bureau announced it was investigating Google’s practices in the digital advertising market. Since then, the enforcer has been tight lipped about the investigation, leaving it unclear whether the investigation was ongoing or had been shuttered. That changed this week when the Bureau confirmed that not only was the investigation still ongoing, but also that its scope had increased. Though details are scarce, the update hints that the Bureau is concerned that Google is leveraging its monopoly power across markets and engaging in predatory pricing. The expanded scope of the investigation is clearly good news. Google is a behemoth in the sprawling online advertising market, controlling how display ads appear on its search results, products and a huge swath of the internet. The technology behind digital advertising is complex. In the fraction of the second before your page loads, an auction occurs to determine which ad will be served to you. With its dominant market shares of the ad server, audience data networks and the “ad exchange,”Google has vertically integrated the adtech technology stack. Ahead of their Canadian counterparts, last year the U.S. Department of Justice launched a suit against Google after its own investigation of the giant’s ad market power last year.
A diagram of the adtech stack and the portions controlled by Google. Source: U.S. Department of Justice. Returning to the Bureau’s announcement, the development is exciting for two reasons. First, the language of the announcement suggests the Bureau is putting to work its recently strengthened abuse of dominance powers that allow it to pursue conduct with the intent to harm competition. Second, by investigating predatory pricing, the Bureau is pursuing an important unfair method of competition. While lower prices is a benefit of competition, predatory pricing is the temporary lowering of prices below sustainable levels to kill even more effective and efficient competitors. Once those challengers have died off, monopolists can return to squeezing their customers. Allowing predatory pricing to occur trades off short term gains for consumers for the long-term benefits of fair competition. While the Bureau’s announcement is welcome news, how long will be the businesses affected by this conduct have to wait for relief? Before the expansion of the investigation, the Bureau had already spent four years looking into Google’s conduct. Last year, Unifor, representing Canadian news outlets, squeezed by Google's outsized control over their primary revenue source, sought an update to the inquiry. With each day that Google's monopoly persists unchecked, the harms multiply for an independent news industry already struggling to survive, to the detriment of the informed public debate that democracy demands. Quebecor Calls Out Bell’s Fibre Pricing PractisesMontreal-based media giant Quebecor and subsidiary VMedia have filed multiple complaints against telecom goliath Bell Canada, alleging that Bell is engaging in anti-competitive practices related to its fibre optic network pricing and access. The complaints filed with the Competition Bureau center on three main issues: market dominance, anti-competitive practices, and the impact on competition. Echoing the Bureau’s Google investigation, Quebecor’s allegations concern predatory pricing and anti-competitive practices in the markets for internet connections into individual homes and businesses as well as the networks that link together major urban centers. The core of their grievance is that Bell, leveraging its dominant position in the market, has engaged in practices designed to undermine competition and unfairly maintain its market dominance. They argue Bell can leverages its power to inflate prices where it faces little competition and use those gains to offer prices below sustainable levels in more competitive markets. In response to regulatory decisions by the Canadian Radio-television and Telecommunications Commission (CRTC), Bell has sought to appeal a decision that would make it easier for independent companies to sell internet services using its fibre network assets. The CRTC's decision was intended to stimulate competition in the internet services market in Ontario and Quebec, where independent internet providers have seen a significant decrease in customers. In response to the decision, Bell announced cuts to its network investment plans, a familiar threat from Canada’s telecoms monopolists. Pharmacy Middleman Sparks Bureau ComplaintThe Canadian Pharmacists Association (CPhA) has filed a complaint with the Competition Bureau against Express Scripts Canada, a pharmacy benefit manager (PBM) and subsidiary of the U.S.-based health insurance giant Cigna Corp. Pharmacy benefit managers like Express Scripts act as intermediaries between pharmacies and insurance companies, adjudicating people's coverage so they don't have to pay the full costs of their drugs at a pharmacy. The CPhA's complaint alleges that the new fee could steer customers away from independent pharmacies who are unable to swallow the cost increase. The CPhA is concerned that the fee arrangement and ESC's practices, including audits and potential reimbursement claim clawbacks, are anti-competitive and could disadvantage rival pharmacies, leading to a less competitive market that ultimately harms consumers. The complaint also highlights issues about patient choice and access to medications, particularly in rural areas where pharmacy options are limited. If you have any monopoly tips or stories you'd like to share, drop us a line at hello@antimonopoly.ca |
Competition Bureau gets court order for investigation into Google's ad practices
The Competition Bureau says it’s obtained a court order in an ongoing investigation into Google’s advertising practices in Canada.
Toronto Sun
The Competition Bureau says it’s obtained a court order in an ongoing investigation into Google’s advertising practices in Canada.