Project Hammer: reduce collusion in the Canadian grocery sector
jacobfilipp.com
jacobfilipp.com
You can do economic analysis of pricing data, and especially the interaction/correlation of multiple streams of prices across time ‘’’
The item in that quote is significantly, significantly harder than the author is giving it credit for. Canada has a competition policy agency. They are (almost surely) entitled to demand data from firms as part of an investigation. Their data will be better than the data here.
You can rarely if ever prove these cases on the basis of data analysis alone. (Indeed if you could the world’s antitrust agencies would just monitor such data! And anyone engaging in collusion would attack the monitoring adversarially - not that hard to predict!)
In grocery data you will be looking at thousands and thousands of prices of different goods from different suppliers with different costs who are exposed to different shocks due to variation in the costs of their inputs or god knows what else.
Not to be negative bc the idea is nice, but this is a complete waste of time.
~ an actual antitrust guy.
Government departments notoriously have serious technical debt, so while they might entitled to demand this kind of data, I sincerely doubt they are doing it with anything resembling modern data analysis. These orgs aren't going to have working data lakes, spark clusters or data warehouses on cloud infrastructure. They maybe have legacy SQL databases being pulled into spreadsheets.
So, while their data access might be better theoretically, I doubt they truly are able to even remotely analyze the data effectively. Data science in govt is notoriously poor outside of Statscan or other tech heavy departments.
The issue here has nothing to do with the size of the data. A grocery store will have 100,000 products at most, probably sets prices about weekly and maybe you have ten years of data. The market is an oligopoly so you have 10-15 store chains. That fits in memory.
The issue is not at all the mechanics of running the analysis but what analysis you run. Or don’t run bc as I said there is no easy way to just “identify collusion” in data like this or every agency would already be doing it
2. Collusion is a strong word. It hints at breaking the law, willfull action, etc. Looking at the price of a competitor and acting upon that, and internal information, is not collusion. It is completely legal and economically rational behaviour. There are hints and information everywhere on which to act. Groceries are an oligopoly, and they are ogipolistic buyers as well. Lots of information for grocers in the price bids of their suppliers, that all groceries get in tandem.
3. I've worked as an economist at one of those government agencies. They are filled with keen PhD / MSc economists looking to bust kartels and find collusion. Geographical price dispersion models are so '00s. There is a lot of positive energy and interaction between academia and government. Actually _proving_ collusion is terribly hard. Prices that move in parallel is not collusion. Proving collusion is finding documents, emails, phone calls, tracking cars with staff members of various firms to motels , paper trails of inside information in another firm. That's collusion. And I fear that's not what happens in the grocery sector.
The motel one comes to mind as real life example of how DoJ in the US prosecuted a proper cartel. The talk was by more a broad-shouldered officer type, than an economist. Certain set of transport firms always had a interesting way of responding to auctions. Always the second best offer was quite far behind and there was a pattern to which firms did or did not reply to a bid request. End of the investigation, they could trace employees of the firms to meeting in a motel before bidding. And somebody left a paper trail.
There is the skillset of the employees, and then there is what management allows employees to work on. A decade or so ago, a Statistics Canada senior manager was interviewed and claimed as fact that they were unable to reproduce an Excel model that analyzed the % of real estate sales to recent immigrants to Canada, one that an individual CRA team (one person I suspect, it's not complicated) in Richmond BC had done a few years before.
At the same time, they were given additional budget of many millions of dollars to accomplish this task and other things. They did not accomplish the task.
> Proving collusion...
The government has tipped their hand already as far as I'm concerned. I don't expect anything would ever be proven, I just want to see as much evidence as possible to help me decide what I am going to believe - I'm certainly not going to take epistemic advice from anyone in the Canadian government.
Surrounding collusion. I can’t tell you what to believe, but keep in mind that there are a lot of reasons why correlated moves in prices can occur without communication. Lots literature in industrial organization (the field of why markets have particular ordening and how actors behave on markets) on signaling. A though experiment might be the games of poker versus bridge on explicit vs implicit signaling / coordination.
https://en.m.wikipedia.org/wiki/Closed-world_assumption
It would be fun if this fellow's initiative actually got some traction, and attention, and then out of the blue they launched a new educational section of their website to assist the public (and journalists...or not) in their thinking on such matters.
I suspect these giant retailers have a risk department, and at least some people in that department would be able to recognize that which the general public and participants in this thread lack the ability to recognize.
That article covers the initial report, not the subsequent claim that they do not have the ability to reproduce it.
> But the report was not made public until a five-year access-to-information battle concluded recently.
This demonstrates that Canadian democracy does not rule according to the will of the people - there was never a referendum on whether the government should hide the truth from citizens.
> Of the 46 houses bought in Burnaby, staff found 72 per cent were purchased by new arrivals to Vancouver who reported an average total family income of just $16,000.
Immigrate to Canada, enjoy all of its world class (at least formerly) social services, but pay no income taxes. Also not the will of the people.
Hanlon's Razor seems to be the guiding principle of journalists, and the general public in general. Gosh, I wonder if our educational curriculum (or lack of specific content) has anything to do with this state of affairs. Note also who it is that determines curriculum.
The appropriate incentive is lacking.
Just like how the SEC whistleblower laws will awarded part of the fines to those who they reported.
Not that prices aren't consistent across a chain, individual stores in one chain will have different prices, calibrated to local supply and demand. In many cases they'll also have local products that aren't in most of the stores in that chain. I think you have to track prices in each and every store, not just per chain.
Still, I think you're right about this fitting in memory. This isn't "big data".
This paper:
https://www.aeaweb.org/articles?id=10.1257/aer.20170116
Is the best case scenario (=easiest) for the exercise you want to do and will illustrate what is hard about the grocery case. In the paper there is:
- One product
- one clearly isolated market.
- four or five firms.
- A clear mechanism for collusion (a government price sharing website).
Even then there is no statistical or econometric test out of the box which “shows collusion”. It’s a great paper (both in my opinion and that’s why it got into AER) but there is nothing they do that says “hey here’s collusion based on this t-stat.”
The grocery case (overlapping markets, thousands of products, many firms) is vastly, vastly harder.
“ A Study of Cartel Stability: The Joint Executive Committee, 1880-1886” By Rob Porter (northwestern)
That paper is a classic and I hope porter gets the Nobel prize for the work he has done.
In that paper, we actually know for sure that there was collusion. Porter is trying to assess how hard it was to sustain collusion using the data. (One thing you are not crediting in your website is that collusion is hard to sustain bc all of the colluders have the incentive to cheat!) It takes a lot of assumptions and serious econometric chops to make the analysis credible.
That paper is 40 years old but what you’re really trying to do with your project is called “structural industrial organization.” It’s been around in the economics literature for a long time. It’s my field. It’s hard.
If you want a recent overview which still won’t answer the question the way you wanted to, get “the handbook of industrial organization” edited by hortacsu et al, or the book draft “empirical methods in industrial organization” by aguirregabiria (who is at U Toronto!) or “quantitative techniques for competition and antitrust” by Davis and Garcés.
Good luck.
Also imagine the false discovery rate of <whatever analysis you think you can do> with the thousands of products which exist in a grocery store!
“Ah look we found collusion in salty snacks between weeks 38 and 45 of 2022 in stores 1, 5 and 13!”
Even if you knew what analysis to do (and you don’t) you are going to end up crying wolf a million times and solving no problem at all.
Again - a worthy effort but the methods just don’t exist.
Investigators work on hunches just fine if you pay them enough.
Mocking the epistemic skills of others while engaging in literal soothsaying (stating facts about future events) shows how culturally conditioned North Americans have become regarding government wrong doing.
I don't expect these people to be successful in their primary goal, but an enticing second order effect is it could accidentally catalyze public interest in epistemology, logic, rhetoric, the nature of Human culture and cognition, and a variety of the other things that keep commoners locked in a sophisticated virtual reality without their awareness (in any sophisticated manner at least). Now that would make this whole game a lot more interesting, because it applies to everything.
You can publish some correlations between prices. (Remember there is no known method where you can look at a time series of prices across stores and say “that’s collusion!”). And hey if you have 10,000 - 100,000 products per store you probably have correlations as high as you want. None of that will actually show collusion or more importantly suggest a policy response.
Even very high correlation _within a category_ across stores isn’t going to do that. Say you find price movements in tomato paste across all N chains are 0.95… ok now what? There are 10,000 or 2,000 product categories so you found a high correlation in one of them what do you want to do about it?
What I want to happen is for those people to realize that they're not alone, and that the whole world is not working to put them at a disadvantage. Really, it's a rather small group of people who are setting the rest of us up to be rats in a maze with no exit. Then I want us to find those people, and go after their bottom line. Nothing violent, just like... welding the doors shut on opening day, that sort of thing.
It might be less rational than something more restrained like getting a law degree and working in the system to bring them to actual justice. But it has... a glimmer of rationality. You're no longer an insane lone wolf lashing out against an impossible situation... now you're a shitty activist, and even if you're not acting with a cohort, you know that cohort is out there. You're not stuck, you're not alone, there's a path forward--you can aspire towards being a less shitty activist.
But it requires a justifiable target, a representative of the untenable situation. A list of potential enemies that's far less than everybody. Once that list exists, I want companies to compete to not appear on that list.
Markets work without being rational, as does evolution (some predation required). This would be the same.
What an unbelievably stupid thing to advocate for, much less under the guise of non violence.
That’s all this metric will show.
It also won’t show supply chain issues that make the Canadian grocery industry look the way it does. As an example, buy 100 head of cattle in western Canada and get the beef into a store. Are you having any luck finding a place to process it?
The agency is likely underfunded, understaffed, and disincentivized from actually fixing the issues which are so pervasive across the country that it's just business as usual for most people..
Would this be the sort of analysis that measured transfer entropy or granger causality?
The fact that they keep approving mergers and acquisitions in telecom, banking, and groceries despite those being some of the most comically oligopoly-esque industries within a country on earth shows just how tragically wrong you are.
If there was 2 telecom companies left standing in Canada, our competition bureau would pretend to study their desire to merge for a year before approving it, under the condition that their collection of subsidiary brands pretend to be different companies while advertising.
So, unfirable? Essentially useless and beholden to little if any performance metrics?
In Canada if you look at telecoms, banks, insurance, grocers, airlines, etc – there are a few major competitors and that's about it. It's very difficult to start a competitor, often for regulatory reasons, and most smaller competitors end up getting bought out by the big guys.
As a result, they have crazy shitty experiences. Telecoms are frustratingly expensive for cable and mobile services. Banks are dreadful and charge fees left and right, for basic things that are free in the US. Customer support with any of these companies is terrible.
I'm not surprised that they are colluding on pricing. It's quite obvious in the telecom market at least.
It seems tricky from the gov's perspective because this oligopoly/collusion behavior likely fuels higher GDP and more tax revenue... but ultimately more competition and consumer protection would make for a better country to live in.
"Canada was, in a lot of ways, built on monopolies — think about the Hudson’s Bay Company or Canadian Pacific Rail. Canada has always feared that if we don’t let our homegrown companies get huge, we’ll get swamped by American competitors. That’s why there’s a tension between Canadian politicians, who often say they’re pro-competition, and the law, which incentivizes consolidation."
I think this strategy work well-enough until about 20 years ago. And by well enough I mean Canadian consumers weren't in an ideal situation, but things were good enough for most Canadians. Now the oligopolies have become basically predatory, gobbling up goverment funds and market capture wherever possible.
Case in point: our Temporary Foreign Worker program (who now make up 7% of the Canadian population) have not only strained housing, healthcare, and the job market it has even been called a "breeding ground for slavery" by the U.N. [1].
[0] https://www.wealthsimple.com/en-ca/magazine/canada-monopolie... [1] https://documents.un.org/doc/undoc/gen/g24/120/97/pdf/g24120...
To be fair it's actually very annoying to find what the actual number is, but this study covering up to 2022 indicates that the number is probably no higher than 1 million (https://www150.statcan.gc.ca/n1/pub/36-28-0001/2023010/artic...).
Probably the most up to date we'd get. I think your numbers are about right at around 1 million for temporary workers and students combined.
Also, I believe Canada's merger laws are very different from the USA's. We (in Canada) didn't check whether a merger is better for customers, the standard was to check whether it was good for shareholders. I believe this is changing with a modification to merger laws in the last year or two. It's slow, but change is coming.
https://www.theworldlawgroup.com/membership/news/government-...
What are the facts? The most important fact is that only a very small number of deals, of limited consequence to the Canadian economy, have gone ahead because of the defence.
...
Indeed, since 2009, the bureau has, we believe, cited the defence only four times (including one transaction that did not proceed in any event) as the reason for its decision not to challenge a merger. In context, roughly 3,000 transactions were reviewed in that same period.
and
https://mcmillan.ca/insights/publications/federal-court-of-a...
On August 1, 2023, the Federal Court of Appeal released its decision in Secure v Commissioner of Competition,[1] upholding the Competition Tribunal’s order requiring Secure Energy Inc. to divest 29 facilities to remedy the anti-competitive effects in 136 markets in western Canada arising from its July 2021 acquisition of Tervita Corporation.[2] It provides important guidance on the standard to be met to establish an efficiencies defense under the Competition Act.
--
Whatever website or platform you read this on, viewed this on, understand that a simple clause in an act must be interpreted by courts, and taken into consideration with all other aspects of a body of legislation. It also must be taken into account with all other case law.
While there are works to amend this act, as you can see from the links above this clause has very little real world impact.
My thoughts on this is that it is another way to gain outrage clicks, and another way to frame a democracy as failing.
While we've certainly seen technology cause and enable change in the private sector, the public sector can basically just ignore disruptive technologies without any real consequences.
If the public sector ever did face any sort of real disruption due to technology, the public sector would likely just regulate away the technology that's causing them problems.
The situation is made worse by a big proportion of the Canadian population being heavily dependent, directly or indirectly, on large and inefficient government. This includes much of the mainstream media, in addition to the overtly government-controlled services (education, health care, policing, etc.), and government itself (politicians, bureaucrats, etc.). These people have no incentive for positive change, and actually a lot of incentive for things to get much worse than they already are.
I think it'll be a mix of economic and demographic factors that eventually result in change, rather than technological factors.
Decades of awful immigration policies have created a society in Canada that's now extremely fractured, well beyond the traditional (and mild in comparison) English/French divide that has already caused enough problems in the past.
Eventually, the already-severe economic inefficiency imposed by government will become unsustainable, and economic troubles will result in "Balkanization" occurring. It will be particularly bad in parts of Ontario and BC, where we already see this beginning to happen.
Care to defined "awful" here? Is this an euphemism to refer to non-European immigrants?
Canada has done very well with immigration IMO. A far more sensible and welcoming system, and most immigrants integrate and do well in Canada pretty quickly.
Bringing in low-skill, low-productivity, and often criminally-inclined foreigners (especially refugees) has also been a significant and socially-costly problem in Canada.
Bringing in foreign "students" has harmed the quality and reputation of Canada's education systems.
Bringing in adult foreigners to do the low-end, part-time jobs that Canadian high school students and university students used to do has hurt Canada economically, and resulted in atrocious service in many retail stores and restaurants.
Bringing in huge numbers of foreigners each year, while simultaneously restricting the construction of new housing, has created severe pricing distortions in the housing and rental markets. These foreigners also put immense strain on the already-insufficient transportation and health care infrastructure.
What you say about "integration" is a myth. A visit to the cities surrounding Vancouver or Toronto will make that very clear, very quickly.
Immigration has been disastrous for Canada.
Could you give some examples of some technologies that might disrupt the status quo being referred to?
Or because the government is working for these oligopolies and not for the people, regardless of the color of their party's logo.
> As a result, they have crazy shitty experiences. Telecoms are frustratingly expensive for cable and mobile services. Banks are dreadful and charge fees left and right, for basic things that are free in the US. Customer support with any of these companies is terrible.
This is funny to me from across the pond, because that's how I'd describe the US as well.
Small amount of telecoms and banks that charge exorbitant fees sounds like the US too.
High barrier to entry for physical infrastructure and banking are the reality all around the world, and for good reasons. There's more to it than that.
Canada has the big 5 / 6 and then a lot of credit unions. Still not 1/10 as many as the good old USA, and that's one industry.
Can't you say literally the same thing about the US?
Let's just agree to disagree.
There is only one way to bring true competition to the Canadian market and that is to let American Companies compete instead of barring them from Canadian markets.
If you recall during NAFTA 2, Trudeau went to great efforts to allow Rogers, Bell and Telus to be re-classified as Canadian Media Companies to protect them from the American businesses. Canadians cheered higher prices and protectionism because fuck America and fuck Trump, but in the end cut off their nose to spite their face.
Canadians deserve their high prices and lack of competition and a market that is not consumer friendly, they made that loud and clear in their support of the Liberals during NAFTA2 Negotiations.
Glad I left a long time ago....
ExPat
Also, is there a write-up of how they collected the prices? I have wanted to do a similar analysis for years, but immediately gave up realizing I would be spending 95% of my efforts scraping and entity matching. By and large manufacturers seem to go out of their way offer unique SKUs intentionally to avoid comparisons.
1. Prices may be regionally or locally varying based on, I assume, either inventory management needs or their idea of what people in one area will tolerate.
2. Pricing gimmicks. At my local supermarket, a standard bag of potato chips is $6.99 or so, but during some phases of the moon it becomes "$1.99 WHEN YOU BUY 4." Other products, a lot of packaged goods, go on sale in bundles: An item that may be $4.99 will be "$1.99 WHEN YOU BUY 5" participating products which may be chosen from certain unrelated stuff, like crackers, Tide, and Pillsbury biscuits. It's up to you to scrutinize the circular, the shelves don't always enumerate the eligible products. And finally, the best one, the "with digital coupon" prices. All you have to do is get on a sluggish app in terrible cell service, get properly signed in (oh, be sure to check your email because we needed to send you a 'security code') and locate and 'clip' the coupon and then you get a sale price. If you forget to do that you'll pay full price.
So in the above situations I'm concerned what kind of data integrity one would get because different consumers will pay different amounts. For instance, not everyone has room to transport 4 bags of chips home, so they may end up spending $7 for 1 instead of $8 for 4. Therefore the chips are simultaneously $2 and $7.
We had people who were underwater for years combined with a new market that cant afford the extremely high fixed costs and end up eventually paying rents higher than the mortgage in many principalities.
If you have a ton of capital it makes perfect sense to park it in a place where you have a guaranteed return.
I assume the premise of Project Hammer is that transparency applied on the food industry would underline some collusion and invite for a debate on whether there's some legislation to apply against such an oligopoly.
If supermarkets are getting together and forming handshake agreements like “we will not change prices between November and February”, like Canadian supermarkets apparently did, then that could constitute collusion.
I'd imagine that even for low-income people, it's the cost/benefit of comparison shopping has been squeezed out by how much prices change on a day-to-day basis. Like sure, if you're buying a lot of something all at once it might make sense to do on that occasion, but once you do that a few times you either learn:
1. Which store usually has the lowest price (and if they have coupons for store X, they might just only go there, because... they can't use the coupon at the competitor's)
2. The difference in price doesn't offset the time-cost of going to multiple stores (and the consolidation of stores means that going to two different stores will take even more travel time).
So, if most people aren't really doing comparison shopping anyway, then you make more money by matching your prices to your competition.
Of course the time it takes to do this makes it all but impossible to actually save money, so it has to be a small portion of their customers.
I have heard that only something like 10% of customers actually give a shit about prices at all, and it is them who keep the prices in check for everyone else. i.e. with razor margins, the retailers can’t afford to lose that 10% customer base
Yes, the vast majority of people don't comparison shop. But people do decide to not buy something if it seems it is too expensive and vice versa, and the effects are seen on the statistical level.
This will be even more popular in situations like supermarkets, where a significant part of the stock has an expiration date that isn't so far from today. Turning your inventory too fast is just as bad as turning it too slowly, so there can be immediate reactions to make sure things are being consumed at just the right speed. And the more uniform the models of consumption the supermarkets are running, the more similar their decisions will be anyway.
So I wonder if we even need to focus on needing damning evidence, or on whether there is collusion, and instead aim for what we want: Dynamics that put negative pressures on prices. If we aren't seeing that, I don't care much about how much is collusion, and how much is models that have tacit agreements because, as market players optimize for what is best for them, there are solutions where high prices across the board makes all sellers win.
That seems like a stretch. What's the casual mechanism behind increased accessibility of data driving up prices? At least with something like stocks you could blame HFT firms piling into the market or whatever. It seems far more plausible that prices rose for other reasons (take your pick of: NIMBYism, immigration, foreign investors, etc.), and the increased accessibility of data happened to coincide with the price rise (ie. similar to https://xkcd.com/925/).
If I set the price to the average, is that collusion or just trying to maximize my profit on apples?
If I set it higher than average, is that collusion, or me telling the market that I think I have premium apples?
How do you get from correlation to collusion? This project seems to build on an assumption that it is collusive to set prices based on other market prices, or else how could it be a hammer to bash collusion? Is it required to be ignorant of market prices when you set a price so that regulators can assume that correlation is evidence of an agreement?
If an ostensibly free market is not producing competition which causes that to happen, it's a problem for society; then, it is society's prerogative to use whatever means appropriate to fix it. That could include, depending on the ideology of the society, loans and grants for new participants in the market, legislation that regulates pricing, specific taxation policies, or even rejecting the free market entirely and moving to central control.
By analogy, a mysterious violent crime case might need to be solved for justice to be attained, but it doesn't need to be solved in order for a society to improve and make itself safer generally.
This occurs regardless of how much competition there is.
Some free markets result in natural monopolies so they don't always cause sales values to trend to production costs. I believe the scenario you are thinking about is "perfect competition". A free market results in perfect competition when a number of other conditions are met, including, but not limited to low barriers to entry, and lots of buyers and sellers.
No, the point of a free market is to let the price system do its thing, and prices have nothing to do with production costs as long as they are higher. If prices appear to move in unison and that actually happens to be because of collusion, in a free market a new competitor could undercut the cartel. That's assuming that the cartel members themselves don't break the collusion, which they have every incentive to.
The long-term impact of collusion on prices is limited compared with e.g. money printing and other sources of inflation.
Did you read that on the website, or are you making that assumption?
This is just a dataset, and on its own isn't going to reveal something like collusion. But if you are researching collusion, you can use this data to help you understand behaviors of businesses.
Also, collusion doesn't necessarily have to involve prices.
If you call the neighboring stores and say "hey, let's all sell apples for 2x our current price so consumers don't have a choice but to buy it for that price", then you are colluding.
Your point does stand though. From the outside it's very hard to distinguish between collusion and not by mere correlation. Prices may converge for various legitimate reasons, and without insider knowledge, reliably identifying collusion is often impossible.
The best-case scenario for the project might involve comprehensively modeling a single product category to demonstrate that only collusion could explain the pricing patterns. Success would then hinge on litigation uncovering direct evidence like incriminating communications.
the reason food is so expensive is because of fuel costs from the last few years, which were further not-helped by both an increase in federal taxes on fuel and the semi-official policy of weakening the CAD against the USD to support exports that weakens purchasing power. the effort appeals to economically illiterate constituents who support "price controls."
if you want to know where canada is on its de-kulakization spiral, the state is blaming "price gougers" for its policy failures, next are hoarders, speculators and probably "international bankers," on the list of clichés.
Regarding food, I beg to differ. The top 3 grocers have price-fixed bread [1] (one prosecution since that article), wage-fixed [2] and have no-compete agreements for certain times of the year [3]. Food prices are not driven by underlying costs here.
1. https://www.cbc.ca/news/business/bread-price-fixing-loblaw-1... 2. https://financialpost.com/news/economy/how-hero-pay-scandal-... 3. https://www.cochranetimespost.ca/opinion/columnists/charlebo...
Food prices are absolutely driven by costs, there is no other basis for them.
Loblaws is a luxury retailer with a limited set of stores and hardly counts as competitive. When someone complains about margins on certain products, ask them to explain complementary goods to you. This project is theatre for people whose understanding of economics ends at monopoly and scrooge mcduck.
Is that why they own the chain "No Frills"?
> with a limited set of stores
Only in the sense that it is a finite number of stores. Loblaw Companies is Canada's largest food retailer.
Uh? Loblaws is the largest or only grocery chain in many parts of Canada.
Every sane government uses taxes, to ensure food independence. A country needs farms beyond all else. The US does this on the back end, using taxes to shore up pricing. One method the US uses is "government cheese", where their federal government buys megatonnes of milk, turns it into cheese, then gives it to welfare recipients. By buying up surplus, the feds keep the price of milk up.
Canada instead regulates milk pricing via quotas.
Both methods involve keeping the price artificially high.
The US follows suit in other markets too.
Based on a brief look by my layman eyes, it does not seem like Canadian grocery chains are vastly more concentrated relative to the US. It's hard to compare because so many of the chains are owned by the same few brands, but this chart is helpful:
https://www.howtocook.recipes/the-largest-grocery-stores-and...
I'd look at the top ten and then ignore Walgreens and CVS. I think you've got 8 conglomerates serving the vast majority of the 330M Americans. (Unclear to me whether Target should be included; I don't know how much of the sales listed there are actual groceries.) The OP article suggest 5 conglomerates serve the large majority of the 38M Canadians.
GFO continued to run an optional pool until the 2020 crop year, but that has now also come to an end. I can't imagine anyone was still using it. It was a product of a bygone era.
Instead, your analysis is simply: "Government bad!"
Don't get me wrong. I'm not saying the government isn't a very large part of the problem (ie for increasing the money supply and a lot of the things you mentioned) but to try and explain what happened to food prices without even mentioning Covid, or record corporate profits, is extremely disingenuous.
But damn those "economically illiterate" serfs complaining about high prices, eh?
That's not exactly a strong indictment: when the average margin for the industry is about 1%, all kinds of things are going to cause this or that industry participant's margin to fluctuate up or down by a factor of 50%, i.e., to go down to 0.5% or up to 2%.
It's not the same thing as Apple's margins, which last time I checked 12 years ago or so hovered around 33%, so if they went up by 50% (i.e., to 50%) it would mean something (at least if they stayed at that high for many years, which BTW you have not mentioned whether the largest grocery chain's did).
That tracks with their financial statements (no new efficiencies).
So, the only way to increase profit margin when input costs are rising is to raise prices more than your costs are rising.
As an aside... Loblaw's margin is upwards of 3.7% not 1%. Before Covid it was around 2% (give or take) for over a half century. The grocery industry may have low margins but they were remarkably stable. Until Covid.
At the same time, you missed eggs and poultry, which are also under supply management like dairy. If we're to be technical it the milk/egg/chicken/turkey marketing board is responsible for managing the supply and therefore prices, which is decidedly not a government entity, but the existence is granted by the government so we'll give you that one.
Loblaws and other companies have a lengthy history of illegal price fixing, monopolistic behaviour and other manipulative activity. Pretending that just more unregulated free market nonsense is going to help the situation is really naive.
Focusing on the overlords is almost always a distraction on the underlying issue - that of the the electorate being too stupid, or ignorant to realize that they are being taken advantage of.
They are colluding... to keep prices low
If anything, Costco's higher prices is more likely to suggest collusion (but still does not imply it).
Unless of course you're a conservative. Then it's somehow always immigration's fault.
And were shut down by a threat of a lawsuit. Apparently you can’t do that in Canada. They had some stupid fine print that said the data was theirs and you can’t use it.
And I seem to recall similar fine print in grocery flyers.
As is the will of people, since Canada is a democracy, and that's what democracies do. Not like those terrible communist governments. Everyone should well know what they do (and how your friendly local neighborhood democracy is so much better, you see), you can read about it in your newspaper quite literally every single day for the last several years/decades.
Threads like these are diamonds in the rough, I love collecting them.
They'd signal rising prices for a category by rising the price on certain products within that category, was one accusation. Extensive use of price scouts aided in this.
Initially the fine was much larger, but ended up at about 450M USD total between the three.
For comparison, the larger company had roughly the same amount as profit before taxes[2] in 2023.
The recent heavy inflation in grocery prices has been far greater than what say the farmers got for the raw products.
That said, here in Norway we have a ridiculous amount of smaller, local grocery stores, rather than fewer larger ones here and there.
As I sit here, in the outskirts of Oslo, within a 15 minute walk I have 8 grocery stores, all from the top three.
[1]: https://www.nrk.no/norge/daglegvare-etterforskinga_-4_9-mill...
[2]: https://www.dn.no/handel/resultathopp-for-norgesgruppen-tjen...
Norgesgruppen's 2005 annual report shows a profit margin of 2.2%. In 2021, that ballooned to 3.8%. That's almost a 75% growth in margin.
Because the grocery chains have subsidiaries that are almost always the owner of the real estate where the stores are located. So they can just set the rent cost of the store in order to get whatever profit margin they deem acceptable.
Then the real estate subsidiary turns around and spends most of their profits buying more real estate. You see it almost everywhere now, grocery subsidiaries buying up whole blocks of nice hhouses, just to demolish them and build ugly concrete cubes with yet another grocery store on ground level and stacks of tiny apartments on top.
The best thing that can be said about these buildings, is that hopefully teachers in a few decades can use them as clear examples to show children just how bad it gets when we let rent seeking MBA fuckers decide things.
The allegations are that the price collusion really took off around 2010. We had had a few foreign companies trying to take hold, like ICA in 2003 and Lidl in 2004. Lidl faced a unified publicity attack by the big three, and didn't last long. ICA bought one of the then-larger chains, but couldn't make it work and gave up in 2015.
It wouldn't surprise me if the "big three" started working more closely together during the "Lidl invasion", and that that laid the foundations for further cooperation later.
Users use a smartphone app to zap the price labels on shelves in shops.
The app can provide basic price history and comparison prices etc.
Furthermore, users could organise into little community groups. The app is tracking what is a good price and what is a good shelf life etc and what is in demand and what is on specific members shopping lists etc and tells the zapper how many to buy for a common stockroom.
Of course the supermarkets will not like people wandering about their shop with an app, but they have a pretty ugly PR problem telling people they aren't allowed to use the app in their store etc?
Or, with big VC backing, in some markets you could set up a mail-out retailer that is just undercutting shelf prices. You have the data on who is buying what and how much they are paying, and you are providing the organisational glue for community group buying and stockrooms, so you could be getting into being a virtual supermarket without renting any retail space?
The fact is that the majority of big brand retailers do not make most of their revenue from selling products, but from selling shelf space. Margins on products are often very low, in the 2-5% ranges. But selling a single 1 meter length shelf space would generate thousands of dollars in revenue annually. That's not something you can charge for easily for an online store.
I roughly counted their plates in one section of the parking lot and about every fifth plate was from Alberta.
Edit: I have also witnessed Canadians in awe at how inexpensive was the stack of chewing tobacco they purchased.
Sin taxes vary across Canada and across the US. Even within the US the range is $6 to $12 [1] per pack of cigarettes.
In Canada [2] the range is $8.60 USD to $11.74 USD per pack.
Were they to declare on the way back as required by law, I strongly suspect it would have been cheaper to buy at home.
[1] https://worldpopulationreview.com/state-rankings/cigarette-p...
[2] https://www.statista.com/statistics/1307607/canada-regional-...
However it feel like the conclusion might be jumping the gun a bit. Instead of "Think there is collusion" -> finding the data top support the claim, maybe run the numbers first and see what they say? I think coming up with a strong position (Canadian stores are colluding) before looking at the data makes it enticing to find numbers that back up the claim, whether or not they are taken out of context.
Ideally, the data would be proving this, but I guess my skepticism is the cost of making a claim before the research is done.
This data set is from scraping online grocery store prices over a period of time, it's not live. It wouldn't improve grocer's price data harvesting, but it does slightly reduce the gap between what they have in hand, and what the public and press can have in hand.
There's one province where people pay roughly half the national average for all there telecom needs - and that's Saskatchewan. SaskTel's mere existence keeps all the majors in line.
Manitobans should be absolutely up in arms over the privatization of Manitoba Telecom.
Canada has a ton of land and just not that many people. There's 3 + Videotron major telecom operators servicing a population the size of California spread out over a land area the size of the United States. The Capex and payback period for spinning up a new, competitive, national carrier is wild (there's a pile of bodies there proving my point) which makes this a perfect job for the government.
There are a lot of us in Manitoba who know this was a crime and we can do fuck-all to change it
They make great organ donors though!
(Not all were economic failures: you can also be a successful and scrappy going concern and that gets you acquired by bigger pockets with a rubber stamp from government that thinks bigger firms are better for all)
They face a lot less monetary risks and people are harder to fire. Not to mention the additional bureaucracy and administrative weight due to the additional laws and regulations that apply to public services and how being a part of the state means facing more administrators and bureaucrats.
Source? Looking at sasktel's website and rogers' website, this claim does not pass the sniff test. Their "basic" plan is $60/month (BYOD) for 15GB of data, whereas rogers gives you 75GB for $65. Even if you don't use 15GB of data and that extra $5 brings you no benefit, the price difference is nowhere near high enough to justify the claim "people pay roughly half the national average".
My takeaway from that is that Sasktel/MTS were much cheaper for a comparable plan, but the average revenue per user is near-identical - so the effect is mostly just that Sasktel/MTS users got more data with their plans. (Which tracks to me, if you halved the revenue of a provincial-scale carrier, they'd be a huge money loser regardless of how many executive salaries got cut or efficiencies got discovered.)
https://hellosafe.ca/en/telecommunications/cell-phone-plans/...
When I was in toronto the guy at the hotel had a 306 (saskatchewan) phone number because it was cheaper.
Sasktel is a great provider. I have fiber to the home in my house, for instance.
Perhaps the government should offer a $500,000 incentive to anyone offering information which demonstrates collusion of a sufficient size.
If consumers are getting systematically ripped off at a scale of many billions of dollars, it seems like we should try to just buy that information rather than pay a few dozen Ph.D’s to build models which demonstrate collusion.
Knowing that employees are one email away from the biggest payday of their lives would have a deterrent effect on executive behavior, too.
https://en.wikipedia.org/wiki/Bread_price-fixing_in_Canada
And that's just what could be proven in court.
https://www.cbc.ca/news/business/canada-bread-price-fixing-1...
The government hasn't taken anyone to court yet, but justice and progress is possible. We will get there by continuing to talk about this and asking fellow Canadians to reflect on the state of our society.
You're moving a four-wheeled vehicle down an aisle, with enough room for 2, maybe 2.5 cart widths. Yet people decide to stop right in the center without considering that they might be blocking someone.
But I'm the jerk if I point it out.
People are so silly (myself included)
Unfortunately, this would have required product data and in-store price data going back decades. And done likely against the wishes of grocery chains, which would have required volunteers to go in and surreptitiously record prices across the country, not something easily doable without a modern smartphone.
> 2. Make the database available in a format that is suitable for academic analysis and for legal action.
Price discovery for any reason is good
I dont think the allegations are worth going into, the dataset should exist regardless
They are not a private company, they run the store as a member owned cooperative. I'm a member, for instance. I have a number and get a discount and some cash back at the end of the year.
If this theory of collusion is true, the coop should be cheaper then right? It's not! Loblaws is typically the cheapest.
What would be a better mechanism of price discovery for such a group of commodities?
I have never viewed an ad match policy with suspicion. Real assets, on the other hand...
Love the data collection project, suspect the foregone conclusion. If we're so convinced already, data may not change anything.
This is the real story:
https://www.theguardian.com/environment/ng-interactive/2021/...
It is usually the local, raw materials where collusion is strongest.
Sounds like Metro just admitted to illegal price collusion to me. If this isn’t illegal in Canada, perhaps the law is the problem?
And the same people that colluded on bread just so happen to sell other grocery goods. Some people think: "hey, maybe we should check out the other stuff they sell". Which seems reasonable to me.
https://en.wikipedia.org/wiki/Bread_price-fixing_in_Canada
From an anecdotal standpoint, when many of the groceries I buy seem to have gone up in price at a rate well outpacing inflation, I can't help but wonder what the hell is going on.
Yes, it obviously shouldn't have happened, but there's no piñata of profit just waiting to be smashed apart that would magically drop grocery bills.
But this ignores other ways grocers make money (at much higher margin) — e.g. by charging their suppliers for shelf space/positioning.
So they can collude on just a few essentials, like I don't know... Bread maybe? And make an absolute killing on bread and mask those profits by claiming that their overall profits are down?
1. If they actually want to make a profit, surely it'd make sense to price fix some high value/volume item rather than something cheap like bread? If anything choosing to price fix bread seems more like incompetence than evil villainy.
2. The parent specifically acknowledges that price fixing isn't okay, but his contention is that overall margins is still low. Who cares if margins for a certain item is high? Are you also upset that mcdonalds make orders of magnitude higher margin on soda than burgers?
Weird that they price-fixed bread for so long then. If it wasn't for profit, was it just for pure hatred of poor people or what?
>If anything choosing to price fix bread seems more like incompetence than evil villainy.
I don't buy "incompetence" as an excuse for a 15-year price-fixing scheme.
>Who cares if margins for a certain item is high?
Who cares if margins across the board are low?
>Are you also upset that mcdonalds make orders of magnitude higher margin on soda than burgers?
I'm upset that there is a history of collusion in the pricing of the food I have to buy to live. I support efforts to make sure more collusion is not happening.
I'm not sure why you're going so hard on this strawman. At no point did I argue it was okay to price fix. In fact in my previous comment I was pointing out specifically that it wasn't okay.
>Who cares if margins across the board are low?
>I'm upset that there is a history of collusion in the pricing of the food I have to buy to live. I support efforts to make sure more collusion is not happening.
Your original claim was "many of the groceries I buy seem to have gone up in price at a rate well outpacing inflation". arcticbull's response was that grocery store margins have stayed low. That seems like a perfectly reasonable response to your claim. You also mentioned bread price fixing, but I don't think anyone is claiming "well their margins are low so price fixing doesn't exist". It's clear that he was addressing your point about overall grocery prices. In that context looking at overall inflation makes more sense than pointing out one specific item has high margins. More to the point, inflation is derived from the price changes from a basket of items. It's therefore almost guaranteed that there's going to be items that will rise higher than inflation. The mere fact that some prices are rising faster than inflation isn't evidence of collusion or price fixing.
You literally said: "choosing to price fix bread seems more like incompetence than evil villainy"
Replying to that is a strawman? Okay.
That said, one of the government reports linked in the article[1] does mention that profit margins have edged up slightly, albeit on the order of 1-2 percentage points.
[1] https://competition-bureau.canada.ca/how-we-foster-competiti...
From the point of view of the average man however, the grocery store is exactly where he is facing inflation daily! This makes it the ideal scapegoat.
The average man will never ever realize that the monetary mass surged during covid while real world production slowed down. More dollars chasing fewer goods & services equals rising prices. That monetary policy smoothed out the COVID downturn and it was a great success, but it was not a free lunch.
In Canada, the grocery stores were caught colluding. Recently. Is it still a "boogeyman" when they were caught in a 15 year long collusion scheme?
For reference, a dozen eggs shot up by a 1.50 since 2022 alone.
Go after the collusion yes but that's not where inflation is coming from.
The title of the article is "reduce collusion in the Canadian grocery sector", not "blame grocery for inflation".
Ctrl+f for inflation in the article doesn't even turn up a result.
[1] https://competition-bureau.canada.ca/how-we-foster-competiti...
Investigation started in 2017 and there was a guilty plea and $50M fine issued in 2023.
>If it is some of Trudeau’s stooges said so, I would not believe it for a second.
What a silly statement. But no, there were confessions and fines and everything!
To add insult to injury, the average Canadian will still brags how effective the COV lockdowns were compared to rest of the world especially big brother USA.
"Inflation" is really the magical bogeyman invented to make people not ask questions about the companies actually raising prices and to instead think everything is controlled by the government. Pay no attention to the CEO and shareholders on their yachts.
I'm not up to date on Cocoa or Coffee bean futures, but the Canadian butter supply chain is not so unstable that the price ought to be varying from $5.50 to $8.50 on a regular basis!
I'm not even sure what kind of game it is they're trying to play. Like, what are they hoping to achieve by jerking their customers around this way?
https://www.bloomberg.com/news/articles/2024-03-31/why-cocoa...
you'd have to have someone who has access to the internal systems that could also track the profit on each item and track that.
<https://en.wikipedia.org/wiki/A%26P>
IGA still exist:
2. No one, other than random people in messages forums, is alleging collusion or price fixing. No one at any university, not the government, not the media.
3. The government’s investigation, which many of the conspiracy theorists site as evidence, shows a lack of competition led to 1 or 2 % increase in price over 12 years, and the vast majority of the price increases was due to things like war in Ukraine, Covid restrictions, fuel prices due to energy crisis.
It isn't possible for you to know this.
> many of the conspiracy theorists
1. People who live in glass houses should not throw stones, or so they say anyways.
2. "Many"? What percentage of the "conspiracy theorists" "are" as you describe?
> and the vast majority of the price increases was due to things like war in Ukraine, Covid restrictions, fuel prices due to energy crisis
I'd like to see if the government investigators used language as loosely as you do.
> 1. Online prices are not the same as in store prices This depends but mostly they match ie online grocer prices in Canada are the same as in-store prices
This is because most grocers have use online prices as flyers / ads / sales pricing for stores.
Also, in Canada, because of price match policies from the grocers themselves, most grocers have to match their own online prices and, in many cases, competitor prices - this includes competitor online prices!!! including sales and flyer offers
https://blog.flipp.com/7-canadian-grocery-stores-that-price-...
Further, there is - pricing law in Canada around charging more than advertised pricing
https://competition-bureau.canada.ca/deceptive-marketing-pra...
- a pricing code of conduct: if an item is more expensive than the listed price, the consumer gets that first item for free. This means that grocers go out of their way to show the lowest correct possible price all the time everywhere.
https://competition-bureau.canada.ca/deceptive-marketing-pra...
The only exception I can think of is delivery prices where in-store pricing will not match the online pricing. But delivery is usually differentiated by completely different branding from the actual store eg Sobey's has the "Voila" brand for delivery and Metro has "metro.ca" as the delivery brand which is distinct from Metro.
> 2. No one, other than random people in messages forums, is alleging collusion or price fixing. No one at any university, not the government, not the media."
This is factually incorrect: grocer bread price fixing / collusion went to court and there was a $500m judgement
https://globalnews.ca/news/10642801/loblaw-bread-price-fixin...
> 3. The government’s investigation, which many of the conspiracy theorists site as evidence, shows a lack of competition led to 1 or 2 % increase in price over 12 years, and the vast majority of the price increases was due to things like war in Ukraine, Covid restrictions, fuel prices due to energy crisis.
Price fixing preceded all these events. In cases being investigated e.g. bread which is now resolved, the period was as far as 15 years back.
https://globalnews.ca/news/10642801/loblaw-bread-price-fixin...
Regarding the bread price fixing scandal, that ended 14 years ago. It ended when internal executives reported it.
The current anger and activism is over the post Covid price rise in food. No one is saying that that is due to price fixing, or collusion. Except random people in forums or fringe bloggers with phds from unknown institutions.
There is actual price fixing. But it is t the grocery stores. It’s the dairy producers. But politically they apparently aren’t a good target.
In order to assess collusion among Canadian Grocers it is important to understand what gross margins have done, as input costs have run up materially as well. Canadian grocer margins have expanded materially, but nowhere near total food inflation costs. While groceries remain a competitive business in many countries, concentration in Canada has led to a material expansion of gross margins since the early 2010s from the low 20s to the low 30s:
https://ycharts.com/companies/LBLCF/gross_profit_margin.
This is a massive increase in gross margins no doubt, and reflects the concentration of market power in Canada, but it is also important to understand that the total food price increase is driven primarily by food itself increasing in price (COGS for grocers) and general CPI in Canada. Meaning Loblaws is driving a bigger wedge to themselves, as are other grocers, but the bigger problem is general dollar devaluation and food input costs to grocers. It is important to look at both aspects of this problem. Right now if you magically waived a wand to reduce prices by 10%, while cost of goods sold remained flat, it would basically wipe out 15 years of gross margin incease to grocers, but would barely benefit families struggling to feed themself (an extra 10 bucks per 100 spent). So yes grocers are a problem, but they arent the problem that politicians (NDP and Liberals especially) scape goat them to be. Federal fiscal and monetary policy is MUCH more likely to be the main culprit to food price increases, and most politicians should be looking in the mirror as opposed to simply blaming grocers (who are also to blame, but lets use pareto's principle here).
Date Value June 30, 2024 33.13% March 31, 2024 32.80% December 31, 2023 32.16% September 30, 2023 31.38% June 30, 2023 32.22% March 31, 2023 32.37% December 31, 2022 31.56% September 30, 2022 31.48% June 30, 2022 32.34% March 31, 2022 32.03% December 31, 2021 31.76% September 30, 2021 31.30% June 30, 2021 31.71% March 31, 2021 31.15% December 31, 2020 30.17% September 30, 2020 29.92% March 31, 2020 30.86% December 31, 2019 30.91% September 30, 2019 30.37% June 30, 2019 31.00% March 31, 2019 30.70% December 31, 2018 30.75% September 30, 2018 29.94% June 30, 2018 30.77% March 31, 2018 30.26% Date Value December 31, 2017 29.82% September 30, 2017 29.02% June 30, 2017 29.22% March 31, 2017 29.45% December 31, 2016 28.81% September 30, 2016 27.91% June 30, 2016 28.24% March 31, 2016 28.77% December 31, 2015 27.92% September 30, 2015 27.05% June 30, 2015 27.67% March 31, 2015 28.14% December 31, 2014 27.63% September 30, 2014 26.27% June 30, 2014 19.75% March 31, 2014 24.51% December 31, 2013 23.91% September 30, 2013 23.15% June 30, 2013 23.64% March 31, 2013 23.99% December 31, 2012 23.23% September 30, 2012 23.29% June 30, 2012 23.63% March 31, 2012 23.83% December 31, 2011 23.18%
Date Value
---- -----
2011 Dec 23.18%
2012 Mar 23.83%
Jun 23.63%
Sep 23.29%
Dec 23.23%
2013 Mar 23.99%
Jun 23.64%
Sep 23.15%
Dec 23.91%
2014 Mar 24.51%
Jun 19.75%
Sep 26.27%
Dec 27.63%
2015 Mar 28.14%
Jun 27.67%
Sep 27.05%
Dec 27.92%
2016 Mar 28.77%
Jun 28.24%
Sep 27.91%
Dec 28.81%
2017 Mar 29.45%
Jun 29.22%
Sep 29.02%
Dec 29.82%
2018 Mar 30.26%
Jun 30.77%
Sep 29.94%
Dec 30.75%
2019 Mar 30.70%
Jun 31.00%
Sep 30.37%
Dec 30.91%
2020 Mar 30.86%
Jun n/a
Sep 29.92%
Dec 30.17%
2021 Mar 31.15%
Jun 31.71%
Sep 31.30%
Dec 31.76%
2022 Mar 32.03%
Jun 32.34%
Sep 31.48%
Dec 31.56%
2023 Mar 32.37%
Jun 32.22%
Sep 31.38%
Dec 32.16%
2024 Mar 32.80%
Jun 33.13%It's just that any successful small chains get eaten up by the giants - "Adonis" got bought by Metro, "Farm Boy" got bought by Sobeys and "T&T" got bought by Loblaws. Any new threat gets eaten up by the big players.
Their drawing power was due to offering ethnic and/or specialty foods (Middle Eastern and Mediterranean products for Adonis, Asian products for T&T, fresh products for Farm Boy) that weren't as common at the more established supermarkets.
I remember being surprised at how expensive items generally were at those chains compared to the more established chains I tended to shop at at the time.
For a customer like me seeking low prices, those smaller chains weren't viable or practical competitors to the larger chains. I'd only end up there as a last resort, typically while travelling and facing time constraints.
But we do protect certain specific industries to our own detriment (e.g. we’ve knee-capped dairy to the point that we hardly export any, while in the free(r)-market, we export 80% of our pulse crops, 90% of our canola crop, 3rd largest wheat exporter in the world).
https://www.ecodainc.ca/pulses/
https://www.ccga.ca/advocacy/trade
https://oec.world/en/profile/bilateral-product/wheat/reporte...
As with oil, we like to export raw resources and let someone else do all the value-add elsewhere. But hey, dairy is very water intensive and it’s not like we enough of that to go around.
https://retail-insider.com/retail-insider/2024/07/why-foreig...