Editor’s note: This column originally ran in June, prior to the recent Rogers network outage.
Canada has a cartel problem.
The first thing that will probably come to mind is of course gangs involved in the drug trade, but that’s not what I’m talking about.
I’m talking about the businesses that have cornered some of the many legal markets in our country.
A cartel, by definition, is what forms when a group of businesses come to an agreement with each other to manipulate prices and competition.
Most Canadians are very familiar with one of these cartels, even if they don’t recognize it. The telecomm companies in Canada have a cartel.
They’ve leveraged their power to squash any competition, and they keep prices artificially high for the services that they provide compared to other parts of the world.
They also cut out swathes of land, which leads to situations like the recent internet blackout across northern B.C. because a single company, Telus, is the sole provider.
What about gas prices? Those companies have posted record profits. Not because they are seeing a record amount of fuel being sold, but because they have artificially raised the prices.
Right now communities across the province are seeing prices higher than they’ve been in years, and it’s not because taxes have gone up and it’s not because the price of oil is up either.
In Vancouver, in 2008 the gas prices were 121.1 cents per litre, according to StatsCan. In June of that year, the price of oil climbed to over $230 a barrel; today the price of oil is just over $150 a barrel, and the price of gas is more than 218 cents a litre in Penticton, and higher in Vancouver.
There isn’t real competition in that market. If there was, there would be companies trying to undercut others with better prices. There aren’t, because there is an agreement, informal though it may be, that higher prices across the board are better for business than trying to sway customers with better prices.
That is the problem with a cartel. It may not be a monopoly, with a single company cornering the market, but it is effectively as anti-consumer.
So what can people do about it?
The first and most common answer to any corporation with bad practices is to boycott them, to vote with your wallet. That works fine in a free market where there are alternatives, where you can take your business elsewhere.
With a cartel, the other businesses in the market are working together, and thus still benefit because the industry still gets your money.
That leaves either mass protest, or government action as the next most impactful measures.
The Canadian Competition Bureau stepped in to see a hold on the Rogers-Shaw merger that would further restrict the competition, limited already, in the telecomm industry.
It may still go through.
The first defense that cartels have is that people don’t know about them.
Once you know though, if you shout it out loudly enough, and get enough people to shout with you, eventually someone will listen.
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