Letters from CAMP

Letters: Monopoly as Wealth Transfer

March 31, 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:

  • The Globe and Mail highlights four Canadian monopolies investors love
  • CAMP covers a hearing on the future of internet competition in Canada
  • Pharmacy regulators push back against pressure to put profits over patients

Let’s dive in.

Globe: Let Investors Have Their Monopolies

Confirming why we get up to work every morning at CAMP, a Globe and Mail review of Canada’s best oligopolies for investors gets to the heart of the lack of competition in various Canadian sectors. The article celebrates how a handful of large, dominant firms in sectors like banking, railways, telecoms and groceries have delivered outsized returns for investors over the past decade by facing little competitive pressure. The article paints these cozy oligopoly environments as a positive for investors, allowing the entrenched players to keep profits high.

The piece highlights how the Big Six banks outperformed the overall Canadian stock market by 48 percentage points over 10 years with their concentrated control of the domestic mortgage and deposit markets. Meanwhile, the two railway giants CP and CN racked up over 240% total returns by facing virtually no new competitors. Finally, it calls out the fat profit margins enjoyed by the three major telecoms and handful of large grocery chains thanks to their dominant market positions.

The lack of competition is framed as an investor’s dream – enabling consistent returns, attractive dividends, and the ability to raise prices with little fear of losing customers. Limited options are portrayed as an inconvenient grumble for consumers, but a great money-maker for those holding the oligopolists’ shares.

The piece perfectly captures the fact that monopolies are essentially a wealth transfer system: equity holders that skew older and richer reap the rewards while everyday consumers and workers get stuck with the bill. With billion-dollar profits on offer, it’s little wonder more emphasis isn’t placed on opening up these concentrated industries to greater rivalry that could benefit the public. The analysis shows that competition advocates have our work cut out for us.

The CRTC and the Future of Internet Competition in Canada

Competition in the internet market is back in the hot seat at the CRTC, Canada’s telecommunications and broadcasting regulator, with a week-long hearing on “wholesale internet access” completed in early February. This week, telecom analyst Bryson Masse summed up the stakes and the latest developments on that file for CAMP. On the docket was the question of whether the incumbent operators of the Fibre-to-the-Premises (FTTP, or more often simply ‘fibre”) networks need to allow smaller players to connect and offer competitive internet services over the latest internet technologies.

The hearing was a culmination of years of regulatory battles between large telecom incumbents like Bell, Rogers, and Telus, and smaller independent internet service providers (ISPs) like TekSavvy and Execulink. The crux of the debate is whether the wholesale access regime should be updated to make it easier for smaller companies to purchase access to incumbent fibre infrastructure, promoting competition, innovation, and consumer choice in the market for advanced internet services.

Throughout the hearing, incumbents argued against mandated wholesale access, citing concerns over reduced investment and the purportedly competitive nature of Canada’s telecom sector. Bell advocated for speed caps and restrictions on indie ISPs accessing its wholesale networks, particularly within five years of new fibre investments. Telus maintained that it should not be considered an incumbent in Ontario and Quebec, seeking access exclusions in its traditional operating areas.

On the other hand, consumer groups, indie ISPs, and some regional players pushed for broad access mandates and improved customer quality-of-service metrics. TekSavvy highlighted the tenuous state of telecom competitors in Canada, while Cogeco asserted that 50% of their wholesale customers were associated with Bell, Rogers, or Telus due to “takeovers” of independent ISPs, posing an existential threat to regional carriers. With internet competition in Canada headed in the wrong direction, the CRTC has the chance to reverse this decline and make next generation internet more affordable for all Canadians.

Pharmacists Push Back Against Corporate Profit Addiction

Ontario’s pharmacy regulator is gearing up for a legal battle against corporate giants after receiving a deluge of whistleblower accounts from pharmacy workers. Thousands of employees have blown the lid off alleged unscrupulous business practices prioritizing profits over patient care and ethical conduct, according to a report from the Ontario College of Pharmacists.

The shocking revelations highlight how major pharmacy chains strong-arm staff to perform unnecessary billable services like medication reviews solely to inflate revenues. Workers reported feeling intense pressure from corporate brass to meet arbitrary targets, even when such services provided no medical benefit to customers. Those who refused to toe the line say they faced reprisals or threats of termination. Beyond just medication reviews, employees disclosed being pushed to rush other patient consultations and cut corners on key responsibilities like dispensing life-saving naloxone. The disturbing patterns point to a corporate culture that systematically undermines the professional judgment of pharmacists and technicians in favor of relentless revenue extraction.

Though legal action is a welcome development, corporate control over independent practitioners with a duty to patients is the root of the issue and should be addressed directly. The monopolization of Canada’s pharmacy has occurred under the watch of regulators and now they face the difficult task of turning back the clock and giving power back to pharmacists.

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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