Competition Bureau report finds Canada’s competitive intensity in decline
Report tracks indicators of competition across the economy from 2000 to 2020
October 19, 2023 – GATINEAU, QC – Competition Bureau
Today, the Competition Bureau published the findings of an in-depth study ꟷ Competition in Canada from 2000 to 2020: An Economy at a Crossroads ꟷ which tracks a decline in Canada’s competitive intensity over the last two decades.
The study is the first of its kind in Canada to provide a comprehensive analysis of indicators of competition across the Canadian economy. These include:
- Concentration, which indicates whether a few companies dominate an industry;
- Industry dynamism, which indicates whether new companies are challenging established ones; and
- Profits and markups, which indicate whether competition is pushing companies to keep their prices low.
The Bureau’s analysis found that Canada’s competitive intensity has fallen over the years, a finding that was reflected across all the indicators measured. Specifically, the Bureau determined that:
- Concentration rose in the most concentrated industries, and the number of highly concentrated industries increased;
- The largest firms in industries are being less and less challenged by their smaller competitors;
- Fewer firms have entered industries overall, suggesting many industries have become less dynamic; and
- Profits and markups have both risen overall, and these increases were generally greater for firms already earning higher profits and markups.
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.
“Our findings further highlight the need to modernize Canada’s competition laws and adopt a whole-of-government approach to promote competition. Without the adoption of pro-competitive policies, Canada risks continuing down the road of declining competitive intensity. Taking action to increase competition will drive lower prices and make life more affordable for Canadians.”
Commissioner of Competition
Competitive intensity describes how hard businesses feel they need to work to gain an advantage over their competitors. When competitive intensity is low, businesses are less likely to lower prices or come up with more innovative products and services.
The Bureau’s study relied on data from Statistics Canada, as well as analysis provided by Dr. Matthew Osborne, Associate Professor at the University of Toronto, and his team.
The Bureau’s aim was not to study any particular sector or market, but to get a broader view of competition in the economy as a whole.
The report contributes to the broader academic discussion of how to best measure and improve competitive intensity. The Bureau will continue to follow the development of research in this field.
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The Competition Bureau is an independent law enforcement agency that protects and promotes competition for the benefit of Canadian consumers and businesses. Competition drives lower prices and innovation while fueling economic growth.
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