Denise Hearn is the co-author of The Myth of Capitalism: Monopolies and the Death of Competition
Innovation is often viewed as new, novel technology—unprecedented discoveries that forever alter the way we conduct business or aspects of daily living. Schumpeter’s “gale of creative destruction” assumes that markets will naturally mutate and evolve as disruptors replace old incumbents. But one of the most pivotal mechanisms for fertilizing the ecosystem of innovation, less often discussed, is robust market competition.
Healthy competition among businesses fosters innovation and the ability for new entrants to compete. Competition is an indispensable element of capitalism. Yet, competition is withering away at a rapid pace, replaced by increasingly larger firms that dominate their respective industries.
Industry concentration has been particularly pervasive in the United States over the last 40 years; however, Canada is no stranger to the role of oligopolies. The most concentrated industries are ones that Canadians will be well familiar with: telecoms, airlines, oil, and banking.
The wireless telecom industry in Canada is heavily concentrated, with the big three (Rogers, Bell, and Telus AKA “Robelus”) collectively capturing an estimated 88.7 percent of the market. ABInBev and Molson Coors maintain a duopoly and control 63 percent of the beer Canadians drink (including Becks, Budwiser, Corona, Miller and seemingly smaller brands such as Granville Island Brewing). Canada’s airline market is a duopoly with WestJet and Air Canada controlling nearly 85 percent of the market between them.
Banking is controlled by the Big Five (TD Bank, RBC, Bank of Nova Scotia, Bank of Montreal, CIBC) and 4 of those 5 have acquired independent investment banks and asset management firms in recent years to swell their assets to enormous proportions, even relative to US banks. Apple and Samsung account for almost 81 percent of all Canadian smartphone sales, and Amazon continues to make headway with ecommerce sales in North America. It captured 44 percent of all US e-commerce in 2017 and close to 22 percent in Canada in 2016. Canadians pay some of the highest rates globally for international travel, cell phone packages, and banking services.