Canadian economy suffers from lack of competition

The Competition Bureau (the independent enforcement agency responsible for regulating competition in Canada) has published a study of the economy from 2000 to 2020. Experts come to an unpleasant conclusion: the country has seen a decline in the intensity of competition over the past two decades.

The study analyzes the following indicators of competition in the Canadian economy:

• concentration of companies in industries (whether some companies dominate);
• industry dynamism (whether new companies are challenging experienced players);
• profits and markups (whether competition is pushing prices to stay stable).

After examining changes in these parameters over 20 years, the Bureau concluded that the dynamics signaled problems in the market. Commissioner of Competition Matthew Boswell summarized it as follows:

"Our findings further highlight the need to modernize Canada’s competition laws and adopt a whole-of-government approach to promote competition. Without the adoption of pro-competitive policies, Canada risks continuing down the road of declining competitive intensity. Taking action to increase competition will drive lower prices and make life more affordable for Canadians."

The Bureau plans to correct a total of 4 problems by the state:

• increased concentration in certain industries;
• reducing the frequency of collisions between the largest representatives in the industries and their smaller competitors;
• reduction in the number of players in the market — in a large number of industries;
• growth in profits and markups — mainly for those who were already market leaders.

This is not the first move to expand government influence over Canada's economy. A month ago, the Competition Act was amended under the pretext of out-of-control food price increases to give The Competition Bureau more leverage over business: from carte blanche investigations to veto power over mergers and alliances.

The Bureau's study relies on data from Statistics Canada as well as analysis by Dr. Matthew Osborne of the University of Toronto and his team. The aim of the authors of the study was not to examine any particular sector or market, but to gain a broader understanding of competition in the economy as a whole.