Canada’s economy has less competition than it used to, new report says
The federal agency in charge of ensuring there’s healthy competition between companies in Canada says there’s less of it than there used to be.
That’s the main takeaway from a new report by Canada’s Competition Bureau, published Thursday, which tracked competition in various parts of Canada’s economy and how it changed between the years 2000 and 2020.
By looking at granular data on profits, business creation and other metrics from Statistics Canada and various other government departments, the report found that overall Canada’s “competitive intensity” — the level to which firms compete with each other to win consumer dollars — has fallen over the years.
That means that instead of getting more competition, industries that were highly concentrated in 2000 were even more concentrated, in fewer hands, by 2020, the report found. And the number of industries deemed to be highly concentrated went up, too.
Rich getting richer
The biggest companies are being even less challenged by smaller new entrants than they used to be, and even the number of new entrants into industries overall has declined.
The rich are getting richer, too, as the report found that profits and markups have both risen over the past 20 years — especially at companies that were already highly profitable in the first place.
“The result of this decline in competitive intensity is that both consumers and businesses have seen fewer of the benefits that a more competitive economy has to offer, such as lower prices, greater choice and more innovation,” the bureau said in a statement.
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While the report was short on concrete details as to how to fix the problem and reverse the trend, in broad terms the bureau said that what’s needed most is a “whole-of-government approach” to foster competition. And an overhaul of competition laws that would allow the bureau to do more to help.
That’s something the bureau has asked for before, most recently in a report on Canada’s grocery industry, which found that overall the sector is not as competitive as it could be, and consumers pay higher prices as a result.
Among the legislative changes the bureau has asked for previously is the ability to compel companies to provide inside information when requested. Currently the system is mostly voluntary.
“Our findings further highlight the need to modernize Canada’s competition laws and adopt a whole-of-government approach to promote competition,” Canada’s Competition Commissioner, Matthew Boswell, said in a news release.
“Without the adoption of pro-competitive policies, Canada risks continuing down the road of declining competitive intensity. Taking action to increase competition will drive lower prices and make life more affordable for Canadians.”
