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Canada’s Declining Competitive Intensity: A 2023 Insight

Competition | Oct 18, 2023

Unsplash Maico Amorim competition - Canada's Declining Competitive Intensity: A 2023 Insight

Image: Unsplash/Maico Amorim

The Competition Bureau has released the findings of its study on competitive intensity in Canada, the first of its kind both for the Bureau and in Canada (Ahem, about time)

The Competition Bureau is an independent law enforcement agency that promotes and safeguards competition for the benefit of Canadian consumers and businesses. They emphasize that competition leads to lower prices, innovation, and economic growth.

See:  Ipsos Survey: Most Canadians Say (88%) We Need More Competition

Objective of the Research and Findings

The main goal of the research was to examine the general state of competition across the Canadian economy and understand how competition in Canada has evolved from 2000 to 2020.

  • The competitive intensity in Canada decreased from 2000 to 2020. This means businesses felt less need to work hard to gain an advantage over their rivals, leading to fewer benefits for both consumers and businesses.
  • Concentration increased, which measures the relative size of firms in an industry, rose in the most concentrated industries. The number of highly concentrated industries also increased.
  • Rank Stability: Top firms were less challenged over time, indicating that they maintained their leading positions in their respective industries.
  • Fewer firms entered industries over time, suggesting that these industries became less dynamic.
  • Both profits and markups for firms rose overall, with greater increases observed for firms that were already earning higher profits and markups.

Implications

  1. The findings emphasize the importance of vigorously protecting and promoting competition in Canada.
  2. They also highlight the need to modernize Canada's competition laws to address the current economic realities and implement pro-competitive public policies.

Briefing Scheduled for 11:15 a.m. EST

The Bureau officials will conduct a technical briefing for the media to discuss the methodology and findings. They will provide opening remarks and then answer questions from the media.

The briefing is scheduled for October 19, 2023, at 11:15 a.m. EST and will be held virtually via teleconference.

See:  Canada’s Competition Consultation Continues (thanks Senator Colin Deacon)

Why Does This Matter?

A decline in competitive intensity can lead to several challenges:

  • Stagnation in Innovation: With fewer competitors in the market, there's less incentive for businesses to innovate, leading to potential stagnation in product and service development.
  • Higher Prices for Consumers: Reduced competition often results in higher prices as businesses face less pressure to offer competitive pricing.
  • Barriers to Entry: A less competitive market can deter new entrants, further solidifying the position of existing dominant players.

Conclusion

Canada's competitive landscape is at a pivotal juncture. While the decline in competitive intensity over the past two decades is a concern, it also offers a chance for introspection and proactive action.

See:  Canada’s Competition Problem: 7 Reasons

At NCFA Canada, we remain committed to fostering an environment where every business, especially small businesses representing the back-bone of the Canadian economy, can compete and thrive, driving Canada's economic future to new heights.


NCFA Jan 2018 resize - Canada's Declining Competitive Intensity: A 2023 InsightThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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