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Is Canada catching the anti-monopoly bug?
An old guard remains dominant, but fresh thinking is breaking out
This article was originally posted on March 1st, but due to an error it was not emailed to free subscribers. This re-post, sent to all, contains no updates from the original.
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Welcome to The Counterbalance, the newsletter of the Balanced Economy Project. This guest article is by Keldon Bester, a co-founder of of the Canadian Anti-Monopoly Project (CAMP) and a fellow with the Centre for International Governance Innovation. He has worked as a special adviser for Canada’s Competition Bureau.
Can Canada be a new “middle power” in the struggle against monopolies?
A striking feature of the growing new antitrust movement has been its global nature. The United States and European Union have been leaders, given their central role in the global economy, but middle-power countries like Australia, or post-Brexit UK have played an important role in identifying harms and crafting responses to the crisis of rising monopoly power.
Canada, a G7 member, should be counting itself in this group of middle powers. Yet it has been effectively absent from the global conversation on antitrust, otherwise known as competition policy. Our competition authority, the Competition Bureau, has contributed little more to the conversation in digital markets beyond a brief 2018 white paper on big data, whose key message was effectively “nothing to see here.”
While peer countries have moved on policy and enforcement action, including the European Commission’s Digital Markets Act (DMA), the United States’ Federal Trade Commission’s (FTC) statement on unfair methods of competition (and much else besides), or Germany’s multiple ongoing investigations into Big Tech under its expanded “abuse of dominance” provisions, the Canadian government is only now, belatedly, opening its competition law for public commentary.
Contrast Canada’s track record with that of its middle-power peer, Australia. The Australian Competition and Consumer Commission (ACCC), created as part of a whole-government focus on competition policy since the 90s, has spent years at the leading edge of global analysis of the power of Big Tech.
The ACCC has over three times as many staff as Canada’s Competition Bureau does, it has created a dedicated Digital Platforms Branch, and it is currently advocating for economy-wide rules to address unfair trading practices such as the covert collection and disclosure of customer information and unilateral contract changes. ACCC boss Rod Sims recognised in 2021 that many digital deals “should not have been allowed to proceed,” and that tougher approaches were needed.
Outdated intellectual foundations
What explains Canada’s feeble participation in this critical global policy conversation? We are not alone in harbouring approaches to antitrust that rely on outdated intellectual foundations. Until real policy change began in 2021, the United States was mired in an antitrust dead-end too. But it would also be inaccurate to compare Canada’s intellectual and political journey too closely to that of the United States.
The U.S. is now waking up from the long hangover of the 70s, and seems to be heading back towards the approaches of past golden “trustbusting” eras, where strong and confident government tackled corporate power head-on.
But Canada never had such a golden era. Since its 1867 confederation, successive governments have tended to see concentrated corporate powers as national development partners, though often with some ambivalence about the resulting tradeoffs. Canada’s current competition law, the Competition Act, came into force in 1986 and bears all the hallmarks of the ‘80s fixation on narrow ‘efficiency’ concerns.
It is true that Canada’s efficiency obsession stems, in some part, from the intellectual revolution in the United States that gave rise to antitrust’s comfort with consolidation and its almost singular focus on low prices, laid out most influentially in Robert Bork’s Antitrust Paradox of 1978.
Yet long before that, the (now long-disbanded) Economic Council of Canada, argued in its landmark 1969 report for a competition policy focused squarely on efficiency, rather than supposedly non-economic goals like diffusion of economic power and fairness. That report stated that, rather than protecting the public interest in competition, Canadian competition policy should henceforth “aim primarily at bringing about more efficient performance by the economy as a whole.”
Lawmakers had initially intended the Competition Act to be a departure from the lax treatment of monopoly under Canada’s original 1889 anti-monopoly laws, which had failed to block a single harmful acquisition in nearly a century of enforcement. But, under big business efforts to block any attempts to rein in corporate power, this laudable aim to beef up antitrust was skewered.
This worldview from 1969, then, underpinned Canada’s current Competition Act. And that 1986 law was the product of a 15 year battle that consumed the careers of multiple responsible federal ministers, and ended up passed (under the incoming Conservative government) as legislation effectively written by the corporations it was supposed to police.
They stripped out proposed fairness considerations, and bright-line rules for mergers (clear-cut guidance that bars acquisitions above a certain market share threshold). Instead, a consolidation-friendly framework emerged, concerned only with avoiding “substantial lessening or prevention of competition” rather than halting monopoly in its incipiency. Even when harms to Canadians were found, the new law would rank alleged cost savings above those harms, excusing dangerous concentrations of economic and political power, in exchange for vague notions of efficiency and international competitiveness.
The fruits of nearly 40 years of this corporate-friendly outcome will not come as a surprise.
Mergers, mergers, everywhere
Today, many markets critical to the daily lives of Canadians are now controlled by a small handful of major firms – and citizens across the country bear the burdens of that control.
Canadians pay some of the highest prices for mobile wireless services in the world. Canadian courts recently doubled down on this by blessing the acquisition of a disruptive wireless and cable competitor.[i]
Canadians have struggled to put food on tables as grocery bills have continued to rise, while major grocery chains have pushed up retail prices while prices paid to producers have remained stagnant, and concentrated processors and retailers have taken a growing share of the overall pot. Even before the recent inflation, Canadians suffered a 15 year bread price fixing cartel that may have extended to other products on grocery store shelves.
Canada also has an effectively duopoly domestic airline market. Following a disastrous holiday travel season, carriers have faced effectively no discipline, with our transport consumer watchdog largely asleep. Meanwhile back on earth, Canadian regulators put up no fight in the monumental Kansas City Southern / CP Rail merger. At the beginning of 2023, there is vanishingly little evidence to suggest that Canadians have much control over domestic firms, let alone the global giants other jurisdictions have tackled head on. Despite our ongoing investigations into Google and Amazon, the only material Big Tech enforcement out of Canada has resulted in a fine worth less than one hour of Facebook’s 2020 revenue.
This sorry state of affairs reflects the scale of the opportunity, if Canada can abandon its monopoly-friendly path and contribute to the changing global antitrust climate. The environment has never been more ripe for change. Globally, organisations like the Balanced Economy Project, the Open Markets Institute, or the American Economic Liberties Project – not to mention changing priorities among regulators – can now give often skittish Canadian policy makers confidence to pursue bold reform.
Better still, there is now a nascent but growing contingent of fresh domestic anti-monopoly voices. My own organization, the Canadian Anti-Monopoly Project (CAMP), along with prominent policy advocates like Vass Bednar, and institutional voices like the Centre for International Governance Innovation (CIGI), are breaking open a policy conversation long dominated by an economic and legal community that feeds a stagnant, monopoly-friendly status quo. Last year, for instance, Canada’s Competition Bureau, silent on policy matters under past leadership, has finally started to raise the alarm on issues it sees with the law, suggesting among other problems that the narrow ‘efficiency’ focus makes it “difficult – if not impossible” to protect emerging competitors in digital markets.
The new federal-level consultation on our competition laws now gives all Canadians and international advocates the opportunity to provide input into the future of anti-monopoly politics in Canada. The over century-long tide has not turned yet – and there will be hard fighting ahead. Big digital firms are already seeking to kill any moves on antitrust legislation, attempting to coerce lawmakers by threatening to pull up and leave if Canada tries to regain control of its economic destiny.
Ignoring these threats, Canada must halt the further consolidation of its already concentrated markets. Reversing the current presumption that mergers are often benign and ‘efficient’, Canada’s laws should start to presume that entrenching dominance is a problem after all, and move to bar acquisitions by dominant players.
But aggressive merger law isn’t enough: for it leaves untouched the existing corporate power that has been allowed to accumulate. To rein in that power, Canada must also emphasise prohibiting unfair methods of competition and addressing monopoly power in its incipiency. In doing so it should incorporate the powers of sub-national provincial governments, putting more eyes on the ground and moving away from a model that relies on a single 400-person agency to police our nearly two trillion dollar economy. Though these kinds of reforms stop short of a deconcentration agenda required to truly break the hold of monopoly on a country’s economy, they would represent a sea change in the tools available to Canadians and a first step to protecting ourselves from monopoly power.
The hard-won battles in other jurisdictions will certainly help Canadians rein in rampant corporate power in our own economy. In exchange, Canada must step into its unique role as a prominent middle power and use its platform to echo the approach that the growing anti-monopoly community has worked so hard to create. By shaking off the false notion that we are a small and passive player on the global stage Canada can not only redraw the balance between citizens and monopoly power within its own borders, but serve as another front in the global fight against monopoly.
[i] Rather than block the merger, courts accepted a remedy where the incumbent would prop up a flagging outside competitor (by giving it some spectrum and customers), an approach that has failed domestically and internationally.
News from the international anti-monopoly movement and elsewhere.
Our new network co-ordinator
We recently advertised for a full time Network Co-ordinator, tasked with building an international network seeking to democratise competition policy, protect democracy and curb excessive concentrations of economic power. After many excellent applications we are delighted to announce that Claire Godfrey has been selected as the winning candidate. She has over three decades’ experience in international organising, planning and strategy: she is an Atlantic Fellow, a former head of inequality policy at Oxfam International, a published academic author, and has extensive experience working with and building alliances with decision-makers, opinion-formers, civil society organisations, and many others. Our current part-time network co-ordinator, Ulrich Müller, is leaving to set up a German anti-monopoly organisation, and will remain an active member of our network.
Our new project: evidence on market concentration
We are embarking on a new project to gather evidence on market concentration and resulting harms, in countries and regions outside the United States. Initially, we will focus fairly strongly on Europe. Early results will be disseminated on our website, which will undergo a re-launch in the next few days.
Our close partners, the Dutch Centre for Research on Multinational Corporations (SOMO) are hiring two corporate researchers: please share.
Part 1 of Simon Holmes' article with Balanced Economy Project's Michelle Meagher on “A sustainable future: how can control of monopoly power play a part” has now been published in the European Competition Law Review (ECLR).
Secrecy, lobbying, closed doors, revolving doors in EU competition policy
We and our allies can highlight three recent articles and submissions, highlighting ‘governance issues’ at the heart of European competition policy and enforcement.
Transparency needed on submissions to merger cases (Corporate Europe Observatory and LobbyControl, with Balanced Economy Project and others.) Currently, submissions from economists and consultancies to merger cases are kept secret, even though it is clearly in the public interest to promote transparency here.
Please Democratise Competition Policy and Enforcement (Article 19, Balanced Economy Project, Privacy International, SOMO). Labour unions, small businesses, civil society organisations and others representing those at the sharp end of monopoly power rarely venture into this forbidding terrain. Partly, because it's technical and 'difficult.' But partly, because the elite rules of the game are stacked against participants from the real world.
Spamming the regulator: How Big Tech's 'economic consultants' undermine EU competition policy (Corporate Europe Observatory, LobbyControl.) The headline, in a way, says it all. Economic consultancies (that we've mentioned before) provide tilted research dressed up as neutral expertise, in such volumes as to weaken the regulators. This is all mixed up, of course, with a revolving-door problem.
Meanwhile, the Offshore Crime and Corruption Reporting Project (OCCRP) writes that Patrick Hansen, the man behind a Luxembourg lawsuit that is likely to force the EU to abandon public beneficial ownership registries, a key EU transparency measure, is connected to more than 100 offshore entities and may have been acting as a proxy for wealthy Russians
Taming The Titans: the March to Monopoly
Episode 1 of a new podcast series from Article 19. This one features Balanced Economy's Nicholas Shaxson.
René Ripasi's short, punchy, draft report on EU competition policy feels the need to underlines obvious points - showing how far the EU competition establishment has bent its toolkit away from the broad public interest.
For example, the report (written for the European Parliament's Committee on Economic and Monetary Affairs) "reiterates that competition policy cannot be pursued in isolation, as an end in itself, without reference to the legal, economic, political and social context." (Message: it should be rooted in the real world, instead of weird other-worldly theories like ‘consumer welfare.’) Or: "The protection of the rule of law is a relevant factor for competition law" (Wait, what?)
It calls for stronger merger control; for making breakups/‘structural measures’ easier; for taking into account wages and labour, and sustainability factors; or "interim measures" to speed enforcement. It also slams member states' shameful unwillingness to fund tech enforcement properly; and plenty more. The draft will be debated and amended (and likely watered down) before a vote in late April. But it is good stuff.
Our allies at the Open Markets Institute (OMI) have just opened an office in Europe: this article by OMI’s Max von Thun (who has also worked for and with us) looks at the current US-EU spat over green subsidies, and raises the concern that subsidies and a relaxing of state aid rules may well see the benefits captured by big dominant players, and large member states, worsening already stark imbalances. The solutions? Focus explicitly and hard on developing a balanced economy.
There has been enormous attention paid to proposals by the U.S. Federal Trade Commission to ban 'non-compete' clauses that hurt workers by forbidding them from going to work for competing firms (anything called 'non-compete' is likely to be troublesome). The FTC estimates the rule could boost workers' earnings by US$ 300 billion a year. This new article by Euractiv shows that -- contrary to what EU competition boss Margrethe Vestager has asserted -- there is good evidence that non-competes are widespread in Europe too, and need to be tackled.
Microsoft-Activision: more mergers fall foul of regulators
The UK's Competition and Markets Authority (CMA) has said in provisional findings that a merger with Activision Blizzard would worsen Microsoft's dominance in cloud and console gaming, and is seeking structural remedies: prohibition or massive divestitures (such as its core Call of Duty gaming franchise.) The U.S. FTC is seeking to block it, and the European Commission is weighing in too. More surprisingly, two large trade unions with strong anti-monopoly credentials, have welcomed the proposed merger - because of a promise that a merger will help Activision workers get union recognition. (Matt Stoller has more on this.)
The European Commission’s investigation into music streaming: Why Spotify has good reasons to be impatient
This article by the Platform Law Blog is all about the arch-monopolist Apple, which is thumbing its nose at the European Commission. And: “as noted elsewhere, Apple is untrustworthy and a threat to the rule of law”.
In Germany, a proposal to strengthen national competition law is being blocked by the Free Democrats (FDP), one of the three governing parties. The reform seeks to give the German competition authority (Bundeskartellamt) new powers to impose remedies after sector inquiries – including break-ups in some cases, without necessarily requiring proof of a specific abuse of dominance. The FDP seems to have dropped its core liberal principles and is dancing to the tune of large businesses.
News from Michael West, an Australian independent media voice. The Big 4 are too big, too powerful, too secretive, and corrupt. As a former PwC partner put it: “The Big Four have . . . strayed from their original and critical role of verifying the accuracy of financial accounts for all stakeholders, to be “accountants of fortune”. West adds: “The answer is to break them up and force them to incorporate.” (See also The Big Con, a new book by Mariana Mazzucato and Rosie Collington, on similar terrain.)
For better or worse, the head of COMESA's Competition Commission has said an incoming continent-wide competition protocol inspired by the EU’s Digital Markets Act will ensure all 55 members of the African Union can introduce and strengthen their own antitrust regimes.
Britain's energy system is characterised by high levels of concentration (and natural monopolies) in parts of the generation, distribution and supply chain - alongside very high levels of private ownership, outdated pricing structures, a poor state of competition - and excessive profits. Ownership of different parts is odd: for example, 40 percent of offshore wind capacity is publicly owned - by foreign governments: the UK public owns just 0.03 percent. Meanwhile, the National Grid which runs long-range electricity transmission, has the usual heavy involvement of financial-sector actors:
Following action by the Irish Council for Civil Liberties (ICCL), the European Commission will start regularly checking the progress of all “large-scale” GDPR cases across the EU.
Isabella M. Weber, Evan Wasner, University of Massachusetts Amherst.
“We argue that the US COVID-19 inflation is predominantly a sellers’ inflation that derives from microeconomic origins, namely the ability of firms with market power to hike prices.” This is the impulse; labour may respond. “Policy should aim to contain price hikes at the impulse stage to prevent inflation from the onset.”
A reminder of the international anti-monopoly event in London on March 25: Resisting Monopoly capitalism conference. We will be presenting.
See also this Brussels, March 2 Conference on Antitrust, Regulation &. the Political Economy.
News from the US
One of the Most Important Antitrust Cases in American History: Our Reaction to the DOJ’s Historic Suit Against Google
“No previous corporation has ever posed such a direct threat to U.S. democracy, or to individual freedom of expression, action, and thought.” - Open Markets Institute. The Justice Department complaint is here: it’s clear, troubling and fascinating.
Antitrust is popular among Republicans
(hat tip: Matt Stoller.)