Letters from CAMP

Letters: Competition Trumps Polarization

July 7, 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:

  • Globe and Mail editorial board highlights unanimous support for stronger competition law
  • U.S. lab testing monopolist Quest Diagnostics moves to acquire Canadian LifeLabs
  • Canadian discount mobile prices rise amid claims of vigorous competition

Let’s dive in.

Globe Notes Rare Moment of Parliamentary Unity in Competition Push

As Letters has detailed before, Parliament’s unanimous support for stronger competition laws has been a refreshing display of bipartisan cooperation amid rising political polarization. This week, the Globe’s editorial board noted that this rare moment of unity underscores the broad recognition that our economy desperately needs to turn away from our monopoly past and embrace fair competition.

CAMP was heartened to see our efforts on the competition reform file acknowledged, with the editorial citing our assessment that the law has shifted from a “pro-consolidation” position to “a much stronger stance against abuses of concentrated economic power.” The Globe is right to identify these reforms as a pivotal turning point in Canada’s approach to market power.

But laws are what we make of them. Moving forward, the real test will be in bold enforcement of Canada’s news competition law. CAMP will be watching closely to ensure the Competition Bureau makes use of the full potential of its expanded toolkit to foster a more competitive, innovative economy that works for all Canadians. This unanimous overhaul has laid the groundwork – now we need to build on it.

Quest for Dominance: U.S. Lab Monopolist Sets Sights on Canada

Quest Diagnostics’ proposed $1.35 billion acquisition of LifeLabs should set off alarm bells for Canadian regulators. While lab testing giant Quest touts the deal’s potential benefits, its track record in the U.S. market tells a far more concerning story.

As detailed in a 2020 expose, Quest has systematically monopolized regional lab markets in the U.S. through predatory tactics and strategic acquisitions. The company has leveraged its market power to engage in exclusionary contracting with insurers, run legitimate competitors out of business with unfair practices, and prioritized profits over timely test results – even during a pandemic.

Now, Quest aims to bring its monopolistic playbook north of the border. While LifeLabs will ostensibly maintain its brand and Canadian headquarters, we’ve seen this story before. Gradual integration and “efficiency” measures often lead to job cuts, reduced competition, and higher prices for consumers.

Though the parties will argue the transaction leaves concentration levels unchanged, Canadian regulators must move to block the spread of Quest’s harmful practices. The health of Canada’s medical testing market, and our healthcare system by extension, may depend on it.

Canadian Mobile Prices Headed in the Wrong Direction

Quebecor is making noise about fulfilling its post-acquisition promises for Freedom Mobile, touting flashy plans like 50GB for $34. But while headline-grabbing offers might seem impressive, they mask a troubling trend: overall wireless revenues per user are creeping back up across the industry.

Case in point: Virgin Plus, Bell’s flanker brand, just hiked prices on most plans by $5-$10 per month. This pattern of “discounts” followed by industry-wide price increases is all too familiar in Canada’s telecom oligopoly.

The key metric to watch isn’t gigabytes per dollar, but average revenue per user (ARPU). Despite periodic plan shake-ups, Canada’s largest providers have consistently grown mobile ARPU year over year. It’s a profitable trick – they offer more data to grab headlines while quietly increasing overall spending through fees, add-ons, and strategic price adjustments.

True competition would drive ARPU down over time as carriers fight for market share. Instead, we see coordinated moves to protect profit margins. Policymakers and regulators need to look beyond splashy GB/$ offers and focus on fostering an environment where carriers are forced to compete on overall value and affordability. Until we see sustained downward pressure on ARPU, claims of a newly competitive wireless market will continue to ring hollow to Canadians.

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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