Competition Bureau

Tuesday June 20, 2023

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Tuesday June 20, 2023

Grocery Monopoly: Big Chains Face Windfall Tax and Code of Conduct Scrutiny

June 18, 2020

In a classic case of Monopoly come to life, the parliamentary agriculture committee is calling for Ottawa to slap a windfall tax on the owners of Big Grocery if they dare to generate excess profits on food items. These wealthy Uncle Milburn Pennybags-like figures must be feeling the heat as the committee released its report on June 13, capitalizing on Canadians’ frustration with rising inflation during their weekly grocery run.

The committee highlighted that while the food and beverage retail sector has been dealing with supply chain issues and labor shortages, they conveniently managed to record an increase in net income. This has led to speculation about the so-called “price gouging” by Canada’s five largest retailers, who hold a whopping 80 percent of the grocery market. It seems the committee is playing the role of Detective Weak Police, wondering if anyone at the Competition Bureau is actually paying attention to what’s happening right before their eyes.

Analysis: Food retail sector facing big changes

March 8, 2023

However, the owners of these Big Grocery chains were quick to defend themselves. They appeared before the parliamentary committee in March and took the oath to solemnly swear that they weren’t profiteering off higher grocery prices. Galen Weston, the president of Loblaw, one of the major players, even had the audacity to argue that “reasonable profitability” is simply part of running a successful business. Oh, how noble of them! Apparently, those profits are just being reinvested into the company and, of course, into the oh-so-needy country.

But if the government decides to implement this windfall tax, it will surely hit the grocers where it hurts the most—their bottom lines. Of course, this hinges on the findings of the Competition Bureau, which is currently conducting a study of food inflation. As expected, the bureau released a statement listing various factors that could have impacted food prices, including extreme weather, higher input costs, geopolitical events like Russia’s invasion of Ukraine, and supply chain disruptions. They seem to be exploring every excuse in the book rather than addressing the elephant in the room—questionable competition factors.

April 13, 2023

Not everyone is convinced that a windfall tax is warranted, though. Gary Sands, the vice-president of government relations at the Canadian Federation of Independent Grocers, adamantly denies any evidence of “greedflation.” He argues that price increases are not limited to the big grocery chains but are apparent in smaller stores as well, as everyone is simply responding to supplier price hikes. Sands presented his case to the committee and warned them of the slippery slope they’re treading on. He rightly points out that if retailers face a windfall tax, suppliers should be subjected to the same treatment, given the interconnected nature of the industry.

The government, however, wants everyone to know that they’re not just picking on grocers. No, no, they’re committed to ensuring that everyone pays their “fair share” of taxes. Adrienne Vaupshas, the press secretary of the federal minister of finance’s office, had the audacity to claim in an email statement that the government has imposed taxes on other companies like banks and insurers in the past. Well, that makes it all fair and square, doesn’t it?

News: Ottawa should consider windfall tax on grocery profits if they’re found to be excessive: report  

May 10, 2022

According to Michelle Wasylyshen, the spokesperson for the Retail Council of Canada, the industry’s price hikes are justified by various macroeconomic trends and have nothing to do with greed. She blames the rising costs of feed, fuel, and fertilizer, along with supply chain disruptions, labor shortages, and climate events, as the real culprits behind food price inflation. Wasylyshen warns against excessive government intervention in the retail food business, claiming there’s no evidence to suggest that meddling in operational aspects would do anything to benefit consumers.

But of course, there are always those who believe that government intervention is the holy grail to control Canada’s grocery oligopoly. Advocates have been clamoring for a grocery code of conduct, similar to those in Australia and the United Kingdom, to rein in the power of Big Grocery. Finally, after years of deliberation and consultation with industry players, it seems that the code is nearing completion. Agriculture Minister Marie-Claude Bibeau even boasts that it could be implemented before the end of 2023. However, the agriculture committee insists that the code must be mandatory and enforceable, or else there’s no guarantee that all the major grocers will willingly sign on. (AI)

 

Friday March 19, 2021

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Friday March 19, 2021

A big deal threatens bigger cellphone fees

There are two things you can bet on when it comes to this week’s $20.4-billion bid by Rogers Communications to snap up rival Shaw Communications.

First, the deal would be very good for both of these telecommunications giants, and not least members of the Shaw family who would personally pocket $920 million in cash for their troubles.

Second, the current takeover plan threatens to be very bad for Canadian consumers, and that probably means people like you. 

Think your monthly cellphone fees are sky-high today? They could blast into the stratosphere if this deal goes through as is. Because if one of Canada’s four biggest telecom companies is bought up by one of the others, there will be even less of the competition so urgently needed to keep some kind of a lid on prices. 

Let’s hope Prime Minister Justin Trudeau is watching this one closely. Let’s hope even more that he’s ready to stand up for the interests of ordinary Canadians. The fact is, cellphone users in this country are already saddled with some of the most bloated cellular fees in the industrialized world. On average, Canadians spend 20 per cent more than Americans and an eye-watering 120 per cent more than Australians for cellphone plans that offer comparable service.

Canada’s “Big 3” telecom companies — Rogers, Telus and Bell — defend the high prices as the cost of providing a first-rate service in a vast land, though the U.S. and Australia are also pretty big places where bills are a lot lower than here. It’s also worth noting that a review by Canada’s Competition Bureau found that those Big 3 telecom companies, however they excuse their pricing, were racking up far stronger profits than their Group-of-Seven or Australian counterparts.

One of the problems industry analysts consistently point to is the lack of competition for providing wireless services in Canada. Today, Rogers, Telus and Bell control nearly 90 per cent of the market. If Rogers is allowed to gobble up Shaw, the Big 3’s market share will rise to 95 per cent. 

Federal government after federal government has agreed more, not less, competition is what this sector needs. And they were all correct. Freedom Mobile, which was started by Shaw in 2016, has been credited with driving wireless plan prices down to at least some degree in Ontario, Alberta and British Columbia.

So what happens if big-fish Rogers swallows up smaller-fish Shaw and takes over not just Shaw’s cable and internet operations in western Canada but its Freedom mobile business? Rogers has tried to silence concerns about its takeover plans by promising not to raise cellphone fees for three years. However sincere that offer is, it would do nothing to stop a whopping fee hike on Day 1 of Year 4.

While Trudeau knows that telecommunications companies need to earn enough money to underwrite expensive investments in internet and wireless networks, he and his party declared they would lower cellphone fees by 25 per cent by the end of 2021.

Given that both the Competition Bureau and the Canadians Radio-television and Telecommunications Commission will now take a year or more to review this deal, Trudeau has time to think this one out carefully. But at the end of the day he should be willing to intervene strongly on behalf of consumers. One option among many would be to approve the deal — if Rogers agrees to sell Shaw’s Freedom Mobile business to a company such as Cogeco, which is interested in expanding into the cellphone business.

Such a deal between Rogers and Shaw might not be as big. Almost certainly, neither would the cellphone bills be in this country. (Hamilton Spectator Editorial)