OTTAWA — As Canadians grow more concerned about rising inflation, competition across different sectors of the economy has become a “kitchen-table issue” at a time when the federal government is reviewing its competition law. The country’s two largest newspaper chains, Postmedia and the owners of the Toronto Star, recently confirmed talks about a potential merger,
OTTAWA — As Canadians grow more concerned about rising inflation, competition across different sectors of the economy has become a “kitchen-table issue” at a time when the federal government is reviewing its competition law.
The country’s two largest newspaper chains, Postmedia and the owners of the Toronto Star, recently confirmed talks about a potential merger, signalling more consolidation in an industry that already has a limited number of players.
In a highly anticipated report about food inflation last week, the Competition Bureau called for more competition in the grocery sector, tying the higher prices to the limited options for consumers.
All of that builds on the mounting scrutiny of several sectors, with the telecommunications industry being the prime example.
The head of the competition watchdog recently said that scrutiny is creating a window of opportunity for action, as the federal government undertakes a review of the Competition Act.
“Competition issues are grabbing headlines across the country,” competition commissioner Matthew Boswell said during a speech last month in Ottawa.
And as Canadians struggle with high inflation, Boswell said it’s easy to see how competition policy “has gone from being a podium 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 day-to-day lives.
“When Canadians are pushed and their budgets are stressed, they work harder to find alternatives to make ends meet. I think that brings forward a lack of options that we have in a lot of areas of our lives that we can kind of afford to ignore in the good times,” Bester said.
“(And) internationally, we’re seeing a real change in how governments and citizens interact with the corporations that make up our daily lives.”
The rapid rise of grocery prices alongside growing profits in the industry have some to argue that firms were profiteering off of inflation.
The Competition Bureau’s report last week found grocery margins have grown modestly yet meaningfully over the last five years, though the trend predates the current bout of high inflation.
“The fact that Canada’s largest grocers have generally been able to increase these margins — however modestly — is a sign that there is room for more competition in Canada’s grocery industry,” the report said.
The bureau laid out the history of consolidation in the industry, arguing that has hurt consumers.
When the Competition Act came into place in 1986, there were at least eight major grocers in Canada. Fast-forward to 2023, and that number has dwindled to just five.
The bureau made a set of recommendations in its report, urging governments to make it easier for more players to enter the market.
A spokesperson for Industry Minister François-Philippe Champagne called the report a good first step, and said the federal government would be reviewing the recommendations to see how it can make Canadians’ lives more affordable.
The dangers of poor competition go beyond prices, experts warn. A study published in the fall by researchers at the HEC Montreal Centre for Productivity and Prosperity found a lack of competition is hurting productivity, too.
The Competition Bureau acknowledged in its report that it hasn’t done enough to protect and promote competition, noting the Competition Act needs to be reformed.
The federal government launched a review of the act last fall and finished public consultations on the changes earlier this year, with the findings set to be released in the near future.
Bester is a loud critic of the law, and wants to see reforms that make it harder for mergers that would hurt consumers to be approved.
The Competition Bureau also needs to be better quipped to handle collusion and cartel conduct, he said, noting it has taken it years to investigate the bread price-fixing scandal.
Bester warned that reform will require politicians to stand up to major companies that aren’t interested in such changes.
“It’s going to take a lot of courage to make the right decision for Canadians,” Bester said.
This report by The Canadian Press was first published July 3, 2023.
Nojoud Al Mallees, The Canadian Press