As Canadians worry more and more about rising inflation, competition between different sectors of the economy has become an issue that many families are discussing, at a time when the federal government is reviewing its competition.
The country’s two largest newspaper chains, Postmedia and owners of the Toronto Star, recently confirmed talks about a potential merger, signaling greater consolidation in an industry that already has a limited number of players.
In a much-anticipated report on food sector inflation last week, the Competition Bureau called for more competition in the grocery sector, linking higher prices to limited options for consumers.
All of this is underpinned by the increasing scrutiny of several sectors, the telecommunications industry being the best example.
The head of the competition watchdog recently said the review creates an opportunity for action, as the federal government undertakes a review of the Competition Act.
“Competition issues are front page news across the country,” Competition Commissioner Matthew Boswell said in a speech last month in Ottawa.
And as Canadians grapple with high inflation, Boswell added that it’s easy to see how competition policy “has gone from a panel topic to a kitchen table issue across the country “.
A lack of options
Keldon Bester, co-founder of the Canadian Anti-Monopoly Project, believes that inflation and global discussions of corporate power have made people more aware of the role competition plays in their daily lives.
“When Canadians are pushed around and their budgets are stretched, they work harder to find options to make ends meet. I think it highlights a lack of options we have in many areas of our lives that we can kind of afford to ignore in good times,” Bester said.
” [Et] Globally, we are seeing a real shift in the way governments and citizens interact with the businesses that make up our daily lives. »
Few grocers, more margins
The rapid rise in grocery prices, alongside growing profits in the industry, has some arguing that companies are profiting from inflation.
The Competition Bureau report released last week found that grocery store margins have increased modestly but significantly over the past five years, although the trend predates the current high inflation.
“The fact that Canada’s major grocers have generally been able to increase these margins, even modestly, shows that there is room for greater competition in the Canadian grocery sector,” the report noted.
The bureau exposed 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. In 2023, that number was only five.
The bureau made a series of recommendations in its report, urging governments to make it easier for more players to enter the market.
Stand up to big business
A spokesman for Industry Minister Francois-Philippe Champagne called the report a good first step and said the federal government would review the recommendations to see how it can make life more affordable for Canadians.
The dangers of bad competition go beyond price, 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 reform.
Ottawa launched a review of the law last fall and completed public consultations on the changes earlier this year, with findings expected to be released in the near future.
Keldon Bester is a staunch critic of the law and wants to see reforms that will make it harder to approve mergers that would hurt consumers.
The Competition Bureau also needs to be better prepared to handle collusion and cartel conduct, he said, noting that it took years to investigate the bread price-fixing scandal.
Mr Bester warned that the reform will force politicians to stand up to big business that is not interested in such changes.
“It’s going to take a lot of courage to make the right decision for the Canadians. »