Increasing Retail Monopoly Power Poses a Threat to Canada’s Post-Pandemic Economic Recovery [Op-Ed]

Date:

Share post:

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

Hudson’s Bay at CF Toronto Eaton Centre – Photo by Dustin Fuhs

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.

Similarly, the beer market is largely controlled by two multinational giants, Anheuser-Busch InBev and Molson Coors.

And the Canadian telecommunications industry is still reeling from the recent merger between two of the industry’s giants, Rogers Communications and Shaw Communications. The implications of this deal are far-reaching.

The Rogers-Shaw merger

The Rogers-Shaw merger’s final approval came with 21 enforceable conditions Rogers and Videotron must adhere to, aimed at bolstering competition and reducing costs for customers.

The merger’s approval depended on Shaw selling its Freedom Mobile business to Quebecor’s Videotron. If Rogers breaches its conditions, it must pay up to $1 billion in damages. Videotron could be subject to $200 million in penalties if it fails to meet its commitments.

Innovation, Science and Industry Minister François-Philippe Champagne holds up a contract between the telecoms and the federal government as he speaks at a news conference about the Rogers-Shaw merger on Parliament Hill in Ottawa on March 31, 2023. THE CANADIAN PRESS/ Patrick Doyle

Despite these conditions, some remain skeptical about the impact of the merger on competition in Canada’s telecommunications sector.

Some critics have argued the merger may lead to higher prices for consumers and less innovation. Carleton University political economy professor Dwayne Winseck warned it could lead to a “tight oligopoly on steroids.”

On the flip side, other experts believe the merger could benefit consumers by accelerating the rollout of 5G networks and improving infrastructure and services, particularly in rural areas.

However, these benefits could be offset by the potential for higher prices and less competition. The merger could lead to a dominant market share in Ontario, reducing competition and potentially leading to higher internet prices.

This is particularly concerning, given Ontario’s average monthly price of home internet services is already higher than the national average. This situation underscores the need for a revamp of Canada’s competition laws.

Loopholes in competition law

The merger has sparked controversy because it exploited weaknesses in Canada’s anti-monopoly law, the Competition Act, to push the deal through.

The Competition Act has been criticized for failing to prevent acquisitions that allow large firms to eliminate competitive threats and solidify their dominance.

As Canada’s competition watchdog, the Competition Bureau can review mergers to determine if they will be harmful to competition. But since its introduction in 1986, the bureau has only challenged 18 mergers and has never won a challenge on final judgment.

The law also has a high bar for intervention in a merger, often favouring negotiated agreements that include concessions or remedies that address some of the competition concerns, but not necessarily all.

The Competition Commissioner, Matthew Boswell, believes the existing competition laws are inadequate. Boswell has been hamstrung by legal loopholes and unable to prevent anti-competitive mergers, like the Rogers-Shaw deal, from happening.

Challenges and opportunities

Along with rising consumer prices, limited purchase options and intensifying competition, the growth of monopolies in Canada has led to a host of other issues.

Monopolies have the potential to stifle innovation — a key driver of economic growth, as a lack of competition tends to dampen innovative efforts. Productivity growth, which is crucial for improving living standards, is also under threat, as monopolies can create an environment less conducive to efficiency and progress.

As Canada embarks on its post-pandemic economic recovery, policymakers must ensure economic resilience and inclusiveness while preventing existing monopoly issues from worsening.

At the same time, there is an opportunity to reshape the economic landscape to encourage competition and foster innovation, benefiting everyone involved in the market.

This journey towards a more prosperous future will require rigorous scrutiny of developments like the proposed Rogers-Shaw merger and the wisdom to navigate the interplay of monopolies, competition and the broader economy.

By Garros Gong, Ph.D. Student in Management Science, University of Waterloo

This article is republished from The Conversation under a Creative Commons license. Read the original article.

1 COMMENT

Comments are closed.

RELATED ARTICLES

Subscribe to the Newsletter

Subscribe

* indicates required

RECENT articles

Retail Insider “Q3 2026 Discount & Off-Price Report”: More Transactions Put Value Models to the Test

Dollarama and TJX Canada generated more purchases as value competition expanded. Retail Insider’s Q3 report examines the different retail models behind that demand and the margins needed to sustain it.

Halifax’s Iconic Mezza Lebanese Kitchen Expanding into Ontario

Mezza Lebanese Kitchen is coming to Ontario and bringing the tradition that has made them Halifax’s most beloved and #1 voted Middle Eastern Restaurant for over 35 years.

Hyatt plans 10 Canadian hotel openings in 2027 as portfolio expansion continues

Hyatt says its Canadian hotel portfolio has quadrupled since 2017, with more than 40 development deals in its pipeline and new brands preparing to enter the market.

Canadian employers respond to economic pressures with hiring freezes, layoffs and increased automation: Littler

A Littler survey of 200 Canadian business leaders finds economic uncertainty, U.S. tariffs, regulatory changes and artificial intelligence are reshaping workforce decisions and workplace policies.

Primaris REIT Advances Hudson’s Bay Leasing as Mall Redevelopment Program Moves Forward

Primaris REIT has increased long-term leasing commitments for former Hudson's Bay stores to 728,000 square feet. Its Q3 2026 results outline projected rental income, redevelopment spending, and the company's acquisition and disposition strategy across Canadian shopping centres.

Retail trade rebounds in August on widespread strengths across most subsectors: Statistics Canada

A rebound in motor vehicle and parts dealers (+1.8%) led the increase in August, driven by higher sales at new car dealers and more than offsetting the decline in July, said Statistics Canada.

Real Canadian Superstore to open new Buffalo Run location Nov. 26

The 102,300-square-foot Calgary-area store was developed in consultation with Tsuut’ina Nation and will feature artwork by four local Indigenous artists.

Food World Plus to open 176,000-square-foot multicultural grocery store in Mississauga

Food World Plus opens Oct. 30 at a former Highland Farms site in Mississauga, offering international groceries, fresh food departments and prepared meals.

Retailers urged to start holiday advertising earlier as shoppers begin buying in September

Nearly half of Halloween shoppers began purchasing in September or earlier, while 81 per cent of Canadians plan to start holiday shopping before Black Friday, prompting calls for retailers to rethink advertising schedules.

Canadian grocers urged to expand plant-based food offerings in new retail playbook

World Animal Protection Canada has launched a retail strategy guide outlining opportunities for grocery chains to increase plant-based food sales and strengthen domestic food supply chains.

Prince Street Pizza Pursues Canadian Expansion as Second Toronto Restaurant Takes Shape

Prince Street Pizza is preparing its second Toronto restaurant at 2472 Yonge Street as CBRE seeks additional Canadian locations. The expansion follows the New York pizza chain's 2023 debut at The Well.

Daily Synopsis: October 29, 2026

DoorDash looks to acquire Instacart, rise of witchcraft stores, JYSK coming to former Moose Jaw Peavey Mart, Daniel's Art Supplies shutting in Toronto, Princess Auto opening Guelph location in December, and other news.

Canadian Tire, Sobeys, IKEA and Tim Hortons Among Winners of Inaugural Retail Sustainability Awards

Retail Council of Canada has announced the winners of its inaugural Retail Sustainability Excellence Awards, recognizing Canadian Tire, Sobeys, IKEA Canada, Tim Hortons and other organizations for initiatives involving recycled materials, refrigeration, logistics and supply chain sustainability.

Oakridge Park Partners with Moment Factory to Launch Interactive Entertainment Attraction in Vancouver

Oakridge Park in Vancouver is partnering with Montreal-based Moment Factory to launch Wonderground on November 2. The ticketed interactive gaming attraction will also accommodate brand activations and events, adding another entertainment offering to the mixed-use retail development.

Walmart Canada Overhauls Great Value as Private-Label Grocery Competition Intensifies

Walmart Canada is redesigning Great Value packaging across its private-label assortment, with nearly 150 products expected to transition in 2027. The rollout comes as Loblaw, Sobeys and Metro compete for Canadian shoppers through their own store brands.

Tate McRae launches fragrance brand with exclusive Canadian Sephora deal

Calgary-born singer Tate McRae is entering the fragrance market with TATE 01, a new perfume developed with Scent Beauty and launching exclusively at Sephora Canada.

Statistics Canada Reports August Job Losses in Retail and Food Services

Statistics Canada says retail payroll employment fell by 4,400 in August, while accommodation and food services lost 6,800 jobs as vacancies held steady at 507,200.

Statistics Canada Reports Eighth Consecutive Monthly Increase in Restaurant Sales

Statistics Canada reports restaurant and foodservice sales rose 0.3% to $8.9 billion in August, despite ongoing profitability pressures across the industry.

LoyauT 2026: The Restaurant Industry Tops Canada’s Loyalty Programs

Salvatoré surprises Québec by jumping straight to the top spot, while Canadians appear to be reaching a plateau in their use of loyalty programs.

Canadian small business sales rise for four straight months, Xero report finds

Canadian small business sales rose 2 per cent year over year in the September quarter, led by Alberta, while late payments remained among the country's biggest challenges, said Xero.