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Canada’s economy has less competition than it used to, new report says

The federal agency in charge of ensuring there's healthy competition between companies in Canada says there's less of it than there used to be.

Analysis of 20 years of data shows competition is getting worse, not better: Competition Bureau

A pair of hands hold a roll of stickers, indicating discounted prices.

The federal agency in charge of ensuring there's healthy competition between companies in Canada says there's less of it than there used to be.

That's the main takeaway from a new report by Canada's Competition Bureau, published Thursday, which tracked competition in various parts of Canada's economy and how it changed between the years 2000 and 2020.

By looking at granular data on profits, business creation and other metrics from Statistics Canada and various other government departments, the report found that overall Canada's "competitive intensity" — the level to which firms compete with each other to win consumer dollars — has fallen over the years.

That means that instead of getting more competition, industries that were highly concentrated in 2000 were even more concentrated, in fewer hands, by 2020, the report found. And the number of industries deemed to be highly concentrated went up, too.

Rich getting richer

The biggest companies are being even less challenged by smaller new entrants than they used to be, and even the number of new entrants into industries overall has declined.

The rich are getting richer, too, as the report found that profits and markups have both risen over the past 20 years — especially at companies that were already highly profitable in the first place.

"The result of this decline in competitive intensity is that both consumers and businesses have seen fewer of the benefits that a more competitive economy has to offer, such as lower prices, greater choice and more innovation," the bureau said in a statement.

WATCH | More needs to be done to help fix Canada's grocery industry:

Calls for more competition to combat soaring grocery prices

4 months ago

Duration 2:23

Featured VideoA new report says there's a lack of competition in the grocery business — and consumers are paying the price. Right now, there are just five big players dominating the market in Canada.

While the report was short on concrete details as to how to fix the problem and reverse the trend, in broad terms the bureau said that what's needed most is a "whole-of-government approach" to foster competition. And an overhaul of competition laws that would allow the bureau to do more to help.

That's something the bureau has asked for before, most recently in a report on Canada's grocery industry, which found that overall the sector is not as competitive as it could be, and consumers pay higher prices as a result.

Among the legislative changes the bureau has asked for previously is the ability to compel companies to provide inside information when requested. Currently the system is mostly voluntary.

The bureau has also asked that Canada's Competition Act be overhauled in a way that would focus more on what's good for consumers, as opposed to having loopholes that allow the vast majority of merger proposals to be approved.

"Merger review for the bureau is the first line of defence against concentration," an official for the bureau said Thursday. "We need a strong Competition Act that lets us gather the information we need go after and the conduct we want to go after and really get remedies."

ABOUT THE AUTHOR

Pete Evans

Senior Business Writer

Pete Evans is the senior business writer for CBCNews.ca. Prior to coming to the CBC, his work has appeared in the Globe & Mail, the Financial Post, the Toronto Star, and Canadian Business Magazine. Twitter: @p_evans Email: pete.evans@cbc.ca

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