From telecom companies to grocers, competition concerns continue to bubble up in federal politics

OTTAWA – With Canadians more concerned about rising inflation, competition between different sectors of the economy has become a “kitchen table problem” at a time when the federal government is reviewing its competition laws.

The country’s two largest newspaper chains, Postmedia and the owners of the Toronto Star, recently confirmed talks of a potential merger, pointing to more consolidation in an industry that already has a limited number of players.

In a highly anticipated food inflation report last week, the Competition Bureau called for more competition in the grocery sector, linking higher prices to reduced consumer choice.

All this builds on the growing attention of various sectors, with the telecommunications industry as the main example.

The head of the competition watchdog recently said that due diligence creates an opportunity for action as the federal government undertakes a review of the Competition Act.

“Competition issues are making headlines across the country,” Competition Commissioner Matthew Boswell said during a speech in Ottawa last month.

And as Canadians grapple with high inflation, Boswell said it’s easy to see how competition policy “has grown from a stage topic to a kitchen table issue across the country.”

Keldon Bester, co-founder of the Canadian Anti-Monopoly Project, said inflation and a global conversation about corporate power have made people more aware of the role competition plays in their daily lives.

“When Canadians are under pressure and their budgets are under pressure, they work harder to find alternatives to make ends meet. I think this brings up a lack of options that we have in many areas of our lives that we can kind of ignore in the good times,” Bester said.

“(And) internationally, we are seeing a real change in how governments and citizens are interacting with the businesses that are part of our daily lives.”

The rapid increase in grocery prices alongside growing profits in the industry has led some to argue that businesses were benefiting from inflation.

Last week’s Competition Bureau report found that supermarket margins have grown modestly but significantly over the past five years, though the trend predates the current period of high inflation.

“The fact that Canada’s largest grocers have generally been able to increase these margins – albeit modestly – is a sign that there is room for more competition in Canada’s grocery industry,” the report said.

The agency laid out the history of consolidation in the industry, arguing that it has hurt consumers.

When the Competition Act came into effect in 1986, there were at least eight major grocers in Canada. Fast-forward to 2023, and that number has shrunk to just five.

The agency made a series of recommendations in its report, urging governments to make it easier for more players to enter the market.

A spokesman for Industry Minister François-Philippe Champagne called the report a good first step and said the federal government would review the recommendations to see how Canadians’ lives could be made more affordable.

The dangers of poor competition go beyond pricing, experts warn. A study published in the fall by researchers at the HEC Montreal Center for Productivity and Prosperity found that a lack of competition also hurts productivity.

The Competition Bureau acknowledged in its report that it has not done enough to protect and promote competition, noting that the Competition Act needs to be reformed.

The federal government launched a review of the law last fall and completed public consultations on the amendments earlier this year, the findings of which will be released in the near future.

Bester is a vocal critic of the law and wants reforms that make it harder to approve mergers that would harm consumers.

The Competition Bureau also needs to be better equipped to deal with collusion and cartel behaviour, he said, noting that it has taken years to investigate the bread price fixing scandal.

Bester warned that reform politicians will have to crack down on big companies that are not interested in such changes.

“It takes a lot of courage to make the right decision for Canadians,” Bester said.

This report from The Canadian Press was first published on July 3, 2023.

PART: