Letters from CAMP

Letters: Canada’s Grocery Budget

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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