Sunday, May 19, 2024
Editorials

Slaying giants

What do higher costs for things like food and cell service, the lack of trust in the “media” or even the lowering quality of entertainment have in common?
The answer is that the industries that provide these goods and services are owned, to a large degree, by a few incredibly large companies.
Take cell phones for example. Canadian cellular service consistently ranks as one of the most expensive in the world. And it doesn’t look like we’re getting what we pay for either, as cheaper services in other countries typically outperform what Canadian service providers offer.
This is due, in part, to the fact that there are only three companies that provide anything approaching nationwide service in Canada: Bell, Rogers and Telus. All three have their own sub-brands that disguise that they are owned by the same three companies. And, together, these three companies own almost all the infrastructure and command overwhelming market power when it comes to setting prices for what has become an essential service.
Another example in the news recently is grocery chains. In Canada, there are three national companies that together own most of the grocery stores across the country: Loblaw, Metro and Empire, with prominent roles played by two American chains, Costco and Walmart.
In response to the high prices we have all been paying for food in recent months, the federal NDP has made an issue of the steady profits of grocery conglomerates, accusing them of profiteering under the guise of inflation.
Inflation is a complicated phenomenon, involving numerous factors, many of which are global in nature, and cannot be attributed simply to greed. At the same time, the fact that there is so little competition within the Canadian grocery industry makes the suspicion that profiteering is occurring seem plausible, especially in light of the Competition Bureau of Canada’s allegation in 2018 that Loblaws, with the help of the consulting firm McKinsey, was fixing bread prices, a staple of the Canadian diet.
Or how about the media? One company, Post Media, effectively owns upwards of 90 per cent of all Canadian daily and weekly newspapers, while television and radio broadcasting are similarly dominated by large entities such as Corus Entertainment, Bell Media and the CBC.
This means that just a few large corporations have enormous influence in determining what constitutes news, what information we are all exposed to, and the editorial spin it is given. It is difficult to imagine this does not have a significant effect on how we see the world, what we believe to be true, how we engage with society and how we vote.
In these and other industries, concentration of ownership almost inevitably produces anti-consumer consequences by diminishing one of the most important benefits of a market economy: choice, which leads to higher prices, lower quality products, less innovation and poorer working conditions for employees.
These giant, near-monopolistic companies also have enormous sway with governments and the setting of regulations that govern their respective industries that enable them to retain and expand their market power through low taxes, subsidies, government contracts and government consent for further mergers. An example is Bill C-18, currently making its way through Parliament, which seeks to accord greater power to companies that produce news content in their negotiations with typically larger companies that distribute and profit from that content on their digital platforms. Meanwhile, the tried-and-true tactic of breaking up massive corporations, and creating space for innovative newcomers to enter the sector, is seemingly never even considered.
What’s missing is sufficient competition, the great leveller in a market economy. It’s what prevents a grocery store from gouging its customers to make excessive profits. It’s what ensures a cell phone company will strive to provide better service than the other guy. It’s what diversifies the perspectives presented by the media.
The shame with the status quo is that market economies have been through this all before. Over 100 years ago, antitrust laws designed to break up large monopolistic companies, were all the rage among progressive social movements and political parties. But it’s a concept that has been sorely lacking in Canadian political discourse of late.
The widely predicted recession will cause a lot of pain to the most vulnerable people in our society. But it could also present the impetus to create a fairer and more rational economy. Slaying the giants, instead of further empowering them, would be one step in the right direction.
Unfortunately, it’s an idea we’re not likely to hear much about through the media generated by the corporations, and paid for by the advertisers, that would be the targets of such a move.

FREE ACCESS FOR EQUITY SUBSCRIBERS

This article is available free to all subscribers to The Equity. If you are a subscriber, please enter your email address and password below.

SET UP YOUR ONLINE ACCOUNT

If you are a subscriber but have not yet set up your online account, please contact Liz Draper at liz@theequity.ca to do so.

HOW TO BECOME A SUBSCRIBER

To become a subscriber to The Equity, please use our Subscribe page or contact liz@theequity.ca