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Project Hammer: reduce collusion in the Canadian grocery sector

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Re: Project Hammer: reduce collusion in the Canadian grocery sector

#131

Post by smbullet »

seabass-labrax wrote: post #119
delichon wrote: post #108

Say I set my apple prices at 0.5 standard deviations below the average prices I can find in the vicinity. Is that an attempt to undercut the market or collude with it? 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 col…

Does that matter except as a philosophical question? The point of a free market in practice is to ensure that sale values are correlated with, and reasonably close to, production costs. 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 ide…

Your premise is wrong. The point of a free market is to allow supply and demand to accurately determine pricing. It is not a desired effect of the free market for production costs to always correlate or even be close to the price of goods or services. Changes in supply and/or demand can cause costs and prices to trend in opposite directions.

Re: Project Hammer: reduce collusion in the Canadian grocery sector

#132

Post by jfil »

b112 wrote: post #109
jfil wrote: post #100

Earlier quoted context omitted.

There's a fascinating cultural history of accepting cartels/oligopoly in Canada. I've heard it described as an "Us Against the Vast North" attitude that prevailed as the British settled Canada. 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 ch…

Mergers have been challenged based upon free market competition for decades, and likely longer. Many mergers go forward with government imposed conditions.

Canada has something called the "Efficiencies Defence" for Mergers. My understanding is that it is used to push through harmful (to consumers) mergers by showing that the shareholders of the merging organizations benefit more than consumers are harmed. Therefore, the merger must go through. Truly twisted.

https://www.theworldlawgroup.com/membership/news/government-...

Re: Project Hammer: reduce collusion in the Canadian grocery sector

#133

Post by icegreentea2 »

jlos wrote: post #116
a13n wrote: post #84

Love this project. I just moved from Toronto, and compared to the US was frustrated by how every major industry in Canada was basically an oligopoly. 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 bi…

Canada is intentionally setup to produce oligopolies as a defense against large American companies: "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…

I don't think the temporary foreign worker program makes up 7% of the Canadian population (that'd be like 2.7 million people).

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...).

Re: Project Hammer: reduce collusion in the Canadian grocery sector

#134

Post by islewis »

Big fan of any data aggregation projects like this, especially with such a relatable theme.

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.

Re: Project Hammer: reduce collusion in the Canadian grocery sector

#135

Post by mb7733 »

islewis wrote: post #134

Big fan of any data aggregation projects like this, especially with such a relatable theme. 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 nu…

We know they have been colluding, the question is on what other kinds of goods?

https://en.wikipedia.org/wiki/Bread_price-fixing_in_Canada

Re: Project Hammer: reduce collusion in the Canadian grocery sector

#136

Post by munificent »

smbullet wrote: post #131
seabass-labrax wrote: post #119

Earlier quoted context omitted.

Does that matter except as a philosophical question? The point of a free market in practice is to ensure that sale values are correlated with, and reasonably close to, production costs. 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 ide…

Your premise is wrong. The point of a free market is to allow supply and demand to accurately determine pricing. It is not a desired effect of the free market for production costs to always correlate or even be close to the price of goods or services. Changes in supply and/or demand can cause costs and prices to trend in opposite directions.

I would argue that the "point" of a free market is that it's a system where participants find it worth participating because they reach their own goals while not having to agree on what the point is with any other participant.

Re: Project Hammer: reduce collusion in the Canadian grocery sector

#137

Post by aceofspades19 »

motohagiography wrote: post #121
jfil wrote: post #105

Earlier quoted context omitted.

I agree with you that Canada has a very unique attitude to competition - it's "Can't we all just get along?" 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…

as per the articles, the investigation that yielded guilty pleas for price fixing was 20 years ago, the current investigation has had no results so the CBC is just narrative churning there. that the "hero pay" was coordinated hardly amounts to wage fixing unless you are litigating like a union rep. Food prices are absolutely driven by costs, there is no other basis for them. Loblaws is a luxury retailer with a limite…

Loblaws owns a huge variety of grocery stores in Canada and they also have a bank (President's Choice Financial) as well as large real estate holdings. There are a fair amount of places in Canada that only have a Loblaws store in the vicinity. As a Canadian, painting them as some sort of boutique luxury store is very strange to me as they have huge grocery stores and are generally considered to be on the cheaper side. You can see by this graph here: https://www.statista.com/statistics/481019/leading-grocery-r... that Loblaws is probably the biggest grocery retailer in Canada.

Re: Project Hammer: reduce collusion in the Canadian grocery sector

#138

Post by bigthymer »

seabass-labrax wrote: post #119
delichon wrote: post #108

Say I set my apple prices at 0.5 standard deviations below the average prices I can find in the vicinity. Is that an attempt to undercut the market or collude with it? 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 col…

Does that matter except as a philosophical question? The point of a free market in practice is to ensure that sale values are correlated with, and reasonably close to, production costs. 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 ide…

> The point of a free market in practice is to ensure that sale values are correlated with, and reasonably close to, production costs.

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.

Re: Project Hammer: reduce collusion in the Canadian grocery sector

#139

Post by islewis »

mb7733 wrote: post #135
islewis wrote: post #134

Big fan of any data aggregation projects like this, especially with such a relatable theme. 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 nu…

We know they have been colluding, the question is on what other kinds of goods? https://en.wikipedia.org/wiki/Bread_price-fixing_in_Canada

Thanks for the context. I'm still not certain that an instance of collusion on the price of bread in 2015 implies wider collusion in 2024.

Ideally, the data would be proving this, but I guess my skepticism is the cost of making a claim before the research is done.

Re: Project Hammer: reduce collusion in the Canadian grocery sector

#140

Post by jsbg »

seabass-labrax wrote: post #119
delichon wrote: post #108

Say I set my apple prices at 0.5 standard deviations below the average prices I can find in the vicinity. Is that an attempt to undercut the market or collude with it? 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 col…

Does that matter except as a philosophical question? The point of a free market in practice is to ensure that sale values are correlated with, and reasonably close to, production costs. 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 ide…

> The point of a free market in practice is to ensure that sale values are correlated with, and reasonably close to, production costs.

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.

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