Where is the competition?

Big news in the business world yesterday in Canada was about Sobey’s purchase of Longo’s for $357 million. Giving them 51% control of Longo’s with an option to control 100% down the road. Normally, it would be the case of another business deal in Canada, however take a step back and see just what the parent company of Sobey’s now owns. Empire Company Ltd., now owns Farmboy, Safeway, IGA, Sobey’s FreshCO, Foodland and now Longo’s.

Earlier this week, it was reported that Rogers is looking to purchase Shaw in the telecom industry. A move that would make them the second largest telecom company in the country.

To say I have issues with both of these deals is an understatement. I’ve stated before a few days ago, of the importance of innovation needed in Canada to adapt to a post COVID-19 economy. We are a large geographically speaking marketplace. Regions are unique and have different tastes and desires to be accommodated. The trick of business is to adapt to those market demands and provide a competitive offering to customers.

Economics 101 always states that under capitalism, competition is good. Thats the point. Through innovation and investment, companies provide goods and services at lower and lower costs. These deals aren’t about providing services or goods at competitive rates for the consumer. It’s about edging out that competition to secure market domination.

Food prices and security are a major concern globally. How can the market place help to solve this issue, if essentially there are only two major players in the country (the other being Loblaws)? The same goes for our telecommunications industry. It is a notorious truth in this country that we pay astronomical fees for our telecommunication services, often for questionable customer service and value return. How does a merger help alleviate this?

More and more in in this country are becoming monopolised. The need to innovate and provide new products and services that attract customers diminishes. All the while prices for goods and services rise. The Canadian consumer suffers in the end. Meanwhile, in Europe and the United States, industries and companies are forced to innovate to continue to compete on an international stage. It’s just basic capitalism 101.

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