Larger manufacturers dominate Canadian business landscape: analysts
Some say a large geography and small population make it more difficult for Canada to support more than a few major players in sectors such as aviation.
Runaway food prices. A massive day-long telecom outage that knocked out internet and phone service across the country. Flight delays, cancellations and stranded air travellers.
What do all of these things have in common, in addition to being the causes of headaches for Canadians in the last 12 months? Some would say the answer is competition — or, to be more precise, a lack thereof.
From grocery and banking to aviation and the wireless and cable industry, many of the services that Canadians rely on every day are dominated by just a handful of major players.
And in the last year, critics have pointed to many of the biggest challenges that consumers have faced — from spiking food prices to last summer’s Rogers outage to air travel chaos — as proof that this country’s competitive environment is broken.
There are many reasons why Canada’s biggest industries are dominated by just a few companies. Some say a large geography and small population make it more difficult for Canada to support more than a few major players in sectors such as aviation.
Others say Canada’s restrictions on foreign ownership in some sectors, such as transportation and telecommunications, play a role in limiting choice for consumers, while others put the blame on the supply management system and its role in Canadian agriculture.
But the federal Competition Bureau, the independent law enforcement agency that aims to protect consumers by fostering a competitive marketplace, believes the problem is that Canada’s competition laws themselves are weak.
In response to the government’s ongoing review of competition policy in Canada, the federal Competition Bureau said in a recent submission that it believes the majority of Canadians see the current competition framework as “outdated, weak, complex, slow and out of touch.”
A 2021 Ipsos poll appears to back that up. The poll of 1,001 Canadians found that 88 per cent agreed more competition is needed in Canada because it’s too easy for big business to take advantage of consumers. Nine out of 10 respondents polled agreed that this country should take steps so that small and medium-sized businesses can compete with the larger players.
“I think it’s fair to say that competition has become sort of a kitchen-table issue. People are seeing the impact or the ramifications of the lack of competition,” said federal Commissioner of Competition Matthew Boswell in a recent interview.
“They’re experiencing it every day, in terms of the prices they pay for many different things, the choices, the quality of service, and the lack of innovation in the Canadian economy.”
The Competition Bureau, which is responsible for administering and enforcing this country’s Competition Act — which hasn’t been updated since 1986 — has been lobbying for reforms it says are needed to bring Canada up to speed with other developed economies.
The Bureau — which has been unsuccessful in challenging some recent high-profile mergers, including the $26-billion acquisition of Shaw Communications Inc. by Rogers Communications Inc., which was approved by the federal government on Mar. 31 — has been lobbying for tougher merger review rules.
It also wants stronger rules against things like collusion and abuse of dominance, when a major player or group acts to stop or substantially reduce competition, things Boswell said are more of a risk in highly concentrated markets such as Canada.
