Competition Bureau report finds Canada’s competitive intensity in decline

Report tracks indicators of competition across the economy from 2000 to 2020

GATINEAU – The Competition Bureau published the findings of an in-depth study Competition in Canada from 2000 to 2020: An Economy at a Crossroads 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.