March 10, 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:

• Competition reform critics call for more monopolies
• Report shows Canadian banks raking in billions of excess fees
• Apple backs down in digital market dust up with Epic Games

Let’s dive in.

Canadian Competition Community Raises The Alarm:
Reforms Will Mean Less Monopolies

Won’t someone think of the corporations who want to buy their way to monopoly? he C.D. Howe Institute’s Competition Policy Council has come out in favour of more monopolies in Canada. In a release this week, the esteemed group came out against rules that would make it harder for companies to merger in already concentrated industries.

Often referred to as structural presumptions, the approach uses the level of concentration in a market as a proxy for how likely it is a merger will be harmful to competition. The logic being that the fewer players in a market, the harder it should be for them to buy up one another. Presumptions like these can be found in Private Members Bill C-352, tabled by the NDP in early fall last year, which along with the Liberal’s C-56 and C-59 form the current slate of proposed changes to the Competition Act..

CAMP has advocated for the inclusion of structural presumptions into Canada’s laws, and we’re not alone. The Competition Bureau has itself said that they would “simplify and expedite merger review.” Critics, like the Competition Policy Council, argue for sticking to Canada’s pro-merger status quo.

The Council lays out the product of that status quo nicely. Of the eight litigated merger cases under the Competition Act, seven included post merger market shares of above 60%, and four involved mergers to near or literal monopoly. Under the status quo, all but two of those mergers were given the all-clear and none of them were blocked outright. While the Council sees this as a positive, it is hard to think of a clearer indictment of Canada’s failed approach to merger enforcement.

With structural presumptions, Canada has an opportunity to get up to speed with peers like the U.S. Federal Trade Commission (FTC) and Department of Justice (DOJ) who have been strong proponents of utilizing the structural presumptions in merger enforcement. If we want to avoid the creation of even more monopolies in the future, a departure from the status quo is desperately needed.

Canada’s Banks Raking in Billions from Excess Fees

A new report from consultancy North Economics has found that Canadians are overpaying billions of dollars per year in bank fees compared to consumers in the U.K. and Australia. The firm calculated that the Big 5 Canadian banks earn $7.73 billion in “excess” annual profits from retail banking fees alone – equivalent to around $250 per Canadian. Fees for basic chequing accounts, non-sufficient funds, overdrafts, and using other banks’ ATMs were found to be dramatically higher than in peer countries.

Authorities like the Competition Bureau have voiced concerns about lack of vigorous competition in Canadian retail banking, and these findings add fuel to calls for reforms.The Minister of Finance Minister has already signaled plans to push for lower fees and more consumer-friendly options in the upcoming federal budget due in April, and legislation to support “open banking” will be passed as part of the bill to support the 2023 Fall Economic Statement.

With other jurisdictions showing much lower fees are possible with greater competition, the report undermines arguments that Canadian banks’ high charges are simply a reflection of their costs. Instead, it suggests another market in need of a major pro-competition shake-up.

Apple Blinks as EU App Store Rules Take Hold

This week provided an early test of how effectively the European Union’s new Digital Markets Act (DMA) can rein in the gatekeeping power of big tech platforms. After what Apple’s leadership considered disparaging tweets from Epic Games CEO Tim Sweeney, the iPhone maker revoked Epic’s developer account that it was using to develop an iOS version of its popular video game app store. That Epic, maker of the ultra popular Fortnite video game franchise, was able to develop the app store at all was the product of the DMA, a sweeping piece of legislation intended to expose digital walled gardens to competition.

Epic has been a vocal critic of Apple’s restrictive App Store policies, especially the 30% commission on all digital payments that flow through the platform and the lack of competing app store options for consumers. The move drew an immediate rebuke from EU antitrust regulators, and within days Apple reversed course and approved Epic’s developer account, allowing it to launch the Epic Games Store in Europe as the DMA mandates.

While just one example, the dust up demonstrates the newfound ability of strengthened competition laws to check some of big tech’s most exclusionary practices. But not everyone has that platform and firepower of the multi-billion dollar Epic Games. It is a strong first showing for the DMA, but the real test will be its ability to allow even upstart companies to challenge the power of entrenched gatekeepers.

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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