Monopolies and monopolistic actions harm us all

Recently, the Competition Tribunal, has decided to allow the Rogers-Shaw merger to move ahead. This is a real shame because it is a tacit approval of the telecom oligopoly that exists within Canada and will result in further monopolization. This decision is certainly not in favour of regular people because monopolization within an economy is almost always bad for consumers. It is the very reason competition laws exist, but unfortunately laws without conflict of interest free, and consumer first enforcement are pointless.

The first legislation regarding competition in Canada was written in 1889. The purpose of the legislation was to prevent undue monopolization, conspiracy, or unreasonable agreements between businesses to prevent restrictions on trade. Subsequently, in 1912, the Supreme Court of Canada ruled that the purpose of the legislation was to protect the public interest with respect to free trade. The Competition Act was signed into law in 1986 establishing the Competition Bureau and Competition Tribunal.

The Competition Bureau, headed by the Commissioner of Competition, is responsible for the administration and enforcement of the Competition Act. The Competition Bureau investigates complaints and decides whether to proceed with the filing of an application under the Competition Act to the Competition Tribunal. The Competition Tribunal is a federal body responsible for the hearing of applications and adjudicating cases based on the Competition Act.

Broadly speaking the purposes of these bodies through the mandate given to these bodies by the federal government is to protect the public interest through ensuring healthy economic competition and preventing collusion by business interests. The situation that exists today is one where there are various oligopolies of large companies in key industries namely telecom, grocery, and insurance. An oligopoly is a market structure characterized by a small number of very large firms producing all or most of the goods and services in an industry. It can result from monopolization of smaller firms by larger firms. In Ontario, there are 3 companies that provide nearly all the cell phone, internet, and cable services, there are 4 companies that provide nearly all the grocery services and just a few companies that provide most of the insurance services.

A monopoly is a market structure where there is no competition and where a single firm provides all the goods and services. One of the purposes of the Competition Act is to prevent monopolies. However, I find that while it has succeeded largely in protecting consumers from true monopolies, it has not gone far enough to prevent the acquisition of smaller companies by larger companies such that oligopolies now exist. This is not to say that any form of mergers and acquisitions should be banned. I believe companies should operate freely as they wish in the economy including partaking in mergers and acquisitions however the government should definitely step in when such activities lead to a situation where regular people and consumers could be at risk of financial exploitation and price gouging. Monopolies and monopolistic actions such as the one enabled by the Competition Tribunal recently are harmful for consumers because they always inevitably result in higher prices and lower service standards.        

Acquisition of smaller companies by larger companies have tangible economic benefits for companies such as creating economics of scale and ultimately higher profits. Large scale acquisitions and monopolistic actions can result in higher efficiency, and potentially more innovation. This is all great for shareholders and the bottom line, and completely acceptable within any economy. After all, in a capitalist system any firm is free to maximize profit. However, the role of a government and by extension government bodies is to be a referee in the game of capitalism and to always protect and promote the interests of middle class and working-class people. As such, government should act to actively foster as much competition in the economy across industries as possible such that no single company or group of companies can collude to exploit consumers through collusion, price discrimination, predatory pricing, limiting supply and other insidious actions.  

How do we prevent this? In my opinion, we can prevent this by electing politicians who will put the public interests and the interests of consumers before themselves, their political success, and their party. We need to ensure these politicians put people in regulatory bodies that feel the same way and prevent regulatory capture. Regulatory capture is a form of corruption in which the regulator serves the commercial interests of a special group or select few at the expense of the interests of the general public. For example, a former telecom executive being the head of a regulator tasked with regulating the telecom industry could constitute regulatory capture whereby this individual would knowingly or unknowingly be biased towards favouring and making decisions in favour of the telecom industry where they previously worked and may hope to work again in the future, over the interests of the general public.

Another more pertinent example of this is the Chairperson of the Competition Tribunal, Andrew D Little. He was appointed in this role in 2020 by the Governor in Council on recommendation of the federal Minister of Justice. However immediately prior to his appointment, he was a partner at Bennett Jones LLP law firm in Toronto, who have Rogers and Telus as their clients. At best, this is a perceived conflict of interest and at worst, this is a real conflict of interest. An individual who is essentially an industry insider, who served in and for the best interests of Rogers, one of the parties involved in the merger outlined at the beginning of this piece, should not be tasked with heading the an adjudicative body where one of the parties of interest, Rogers, is his former client. 

I care about a healthy functioning democracy that is free from any corruption however big or small. We must always avoid perceived or actual conflicts of interests because they usually lead to corruption if uncorrected or unaccounted. The most corrupt countries on earth weren’t made that way nor did they get there overnight but rather with little lapses and little corruptions that compounded over time. Politicians and governments as a whole should be held to a far higher standard than the general public and should always without prejudice serve and protect the interest of the general public. Consumer protection should be a top priority for a government because consumers constitute the vast majority of the regular people living in any jurisdiction and as such their interests should be protected. Enabling and not doing enough to prevent monopolization within Canada and Ontario is against the best interests of the hardworking middle class and working class people that run this country and province.

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