Increasing monopoly power poses a threat to Canada’s post-pandemic economic recovery

By Garros Gong, University of Waterloo

Canada is currently grappling with a significant economic issue: market concentration. A select few corporations dominate key sectors, leading to reduced competition, rising prices and limited purchase options for consumers.

Canada’s grocery industry is a prime example of this. A recent report from the Competition Bureau found that a lack of competition in the grocery sector is resulting in higher food prices.

The grocery industry is dominated by five major players — Loblaws, Metro, Empire (the owner of Sobeys), Walmart and Costco. These five companies account for over three-quarters of all food sales in Canada.

The Bureau recommended four policies to encourage competition in the sector. These include establishing a grocery innovation strategy, encouraging new independent and international players, introducing legislation for consistent unit pricing and limiting property controls.

While independent grocery chains could be a viable alternative, they don’t occupy as large a presence of the market as they do in other countries. The Canadian grocery market is heavily concentrated and limits the ability of independent chains to compete by forcing them to purchase their products from larger chains.

History of monopolies

Canada’s economy has historically been marked by notable monopolies, thanks to its vast geographical expanse and relatively sparse population.

Entities like the Hudson’s Bay Company and Canadian Pacific Railway company played significant roles in the country’s development. This largely happened out of concern that domestic companies would be overwhelmed by American competitors unless they grew significantly.

Recent trends indicate this phenomenon is not only persisting, but intensifying. While Sobeys, Loblaws, Metro, Costco and Walmart dominate over 60 per cent of the grocery sector, Bell, Rogers and Telus command about 89 per cent of the wireless telecommunications market.

The concentration of power extends beyond these sectors. The banking industry in Canada is dominated by six banks — the Royal Bank of Canada, TD Bank, Scotiabank, the Bank of Montreal, CIBC and National Bank, which collectively control about 93 per cent of the industry.

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