Letters from CAMP

Letters: Fighting Unfair Competition

June 2, 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:

  • How fair competition is at the heart of the Bureau’s Loblaws-Sobeys investigation
  • Canada’s legal community prepares for stronger stance against mergers
  • Startup incubator Y Combinator heads to Washington to fight for Little Tech

Let’s dive in.

Putting a Lid on Unfair Competition in Grocery

Last 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 Reality

Canada’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 Hill

Y 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

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