Editorial: Canada’s business concentration crisis


Diversity is an increasingly complex challenge for Canadian business and its clientele.

It goes far beyond human resources.

Diversity in this case comes down to choice, without which consumers and competition are shortchanged.

In a recent white-paper analysis of the shrinking competition in North American industries, a pair of researchers from York University’s Schulich School of Business note that consolidation is increasing the leverage of larger companies at the expense of their smaller counterparts.

Are Industries Becoming More Concentrated? The Canadian Perspective also notes that the number of non-financial companies listed on the Toronto Stock Exchange has fallen by approximately 40% since 2008.

That precipitous drop in corporate numbers and variety means that diversity across a wide range of industries in North America is disappearing.

That might be good news for the survivors in whichever industry sector where mergers-and-acquisitions fever is eliminating competition, but it is far less positive for buyers and consumers in those sectors.

The analysis also notes that the combination of more corporate consolidation and less choice is killing the appetite for foreign or domestic investment in Canada.

Neither is good for a Canadian economy that is heavily dependent on exports and investment dollars to fund expansion of production and innovation and in a country that is now under siege from a host of marketplace forces and complicating diplomatic factors that are straining its relationship with its two largest trading partners.

The white-paper analysis singles out several factors contributing to the rise in corporate concentration and the drop in marketplace diversity in Canada. Lax enforcement of antitrust laws is among them.

Couple that with Canada’s traditional reluctance to provide meaningful prosecution of corporate chicanery in equity markets and you have a recipe for ineffective control of backroom business dealings and the spread of monopolies.

Winners here are multinational mega-companies; losers are local business vitality and initiative.