Competition pushes us to surpass ourselves, to innovate, to perform. Canadian athletes prove this to us every day at the Olympic Games. What a spectacle!
If only Canadian businesses had the same competitive spirit.
Groceries, transportation, telecommunications, financial services… In Canada, the blessed land of oligopolies, too many economic sectors are dominated by a handful of big players well-settled in their slippers. And it is consumers who pay the price for the lack of competition and productivity in our economy.
When will we see in Canada a decision as significant as the one that hit Google in the United States this week?
A judge has ruled: Google is a monopoly. And it has abused its dominant position.
In a single year, the giant paid out $26 billion to convince companies to install its search engine as the default on their devices. Apple alone raked in $20 billion. Pure profit! It’s mind-boggling!
By doing this, Google blocks the way for competitors who want to reach new users. This strategy also allows it to monopolize a maximum of search results, thus making its algorithms even more efficient and difficult to compete with.
The battle is not over, because we do not yet know what sanctions or corrections will be imposed on Google, which will certainly appeal. But this bold decision proves that our neighbors do not hesitate to bring their giants who are leading too far into line.
The same cannot be said for us.
In Canada, the famous bread cartel case, which the Competition Bureau has been working on for nine years, is never ending.
Last week, Loblaw and its parent company, George Weston, agreed to pay $500 million to consumers following a class action lawsuit.
Yes, it’s huge. It’s the largest award ever in an antitrust class action in Canada. But it’s a fraction of the roughly $5 billion the companies are said to have made from artificially inflating the price of bread for 14 years.1.
Of course, the case is not over. Metro, Walmart Canada, Sobeys and Giant Tiger are also targeted by the class action.
And the Competition Bureau may eventually get convictions.
To date, Canada Bread has pleaded guilty, resulting in a record fine of $50 million.
Loblaw and Weston also admitted their wrongdoing. But by alerting the Competition Bureau in 2015, the two companies obtained immunity. This strategy therefore allowed them to avoid a fine, while harming their competitors.
Such a windfall is enough to make one cynical. But at least the Bureau’s investigation helped to dig deeper into the case, which helped the victims prepare their class action for compensation.
Still, all this fuels consumer distrust. And rightly so.
In Canada, the intensity of competition has melted over the past 20 years. Industries have been concentrated in the hands of a few players who have managed to increase their profit margins. This leaves little room for new entrants who could boost the market by innovating, reducing their prices or offering better quality products.2.
After decades of neglect, the post-pandemic inflationary surge has forced Ottawa to react. Several recent changes to the Competition Act should have a positive effect.
For example, the criteria surrounding corporate mergers have been tightened. And the Competition Bureau has been given the ability to launch investigations into an industry, with the power to demand relevant information from companies. This is not a luxury! This essential tool existed in all G7 countries.
In fact, the Bureau launched an investigation into competition in the airline industry at the end of July. This is a good omen. But the tree will be judged by its fruits.
Strengthening the law is not enough. We must also have the will to apply it firmly.
In the United States, the winds of change were felt in 2020, with the publication of a vast report by the House of Representatives which highlighted the anti-competitive practices of the web giants.
This bipartisan political awareness paved the way for the lawsuit against Google, but also those against Amazon, Apple and Meta that are still before the courts.
For Canada to see a landmark decision like Google’s, it will take a culture change at every level. Not just a change in the law.
1. Read the article “Bread Price Fixing: A Little Tap on the Fingers”
2. Read the government report on competition in Canada from 2000 to 2020